Since its founding as a modern nation-state in 1948, Israeli society has dealt with the tension of wanting to simultaneously be a democratic state and a Jewish state. Depending on what feature of Israeli society you decide to observe, some institutions are more secular than others. However, the Knesset, which is Israel's legislative branch, decided to remove some of the dichotomy. Last week, the Knesset passed the "Basic Law: Israel as the Nation-State of the Jewish People." Instead of having a formal constitution, the Israeli government passes what are known as Basic Laws, which require a supermajority vote. I took a look at the English translation (see here), and as a matter of practical implications, the Basic Law seems to be largely symbolic in nature.
It's not like Israel being a Jewish state is news. Multiple democratic nations have preferred or official state religions, including the United Kingdom, Argentina, the Scandinavian countries, and Greece. There are also 136 nations that incorporate religion into their national anthems and 64 nations that incorporate religious symbolism into their flags. I cannot imagine there being an issue with religious symbolism enshrined into law without there being a double standard. So what are the issues that critics are raising?
Official Language: One actually has to do with Hebrew as an official language (§4). The provision states that the only official language in Israel is Hebrew (§4.A). Prior to this Basic Law, Hebrew and Arabic were the two official languages of Israel. Critics of the Bill are not happy with Arabic's demotion. I would argue two things. The first is that Arabic as an official language is a remnant from the Palestinian Mandate (Article XXII). I would additionally argue that when Israel was first a state, most of the 150,000 Arabs within Israeli borders did not speak Hebrew (Ozacky-Lacker, 2001). Since that time, Israeli Arabs have, on the whole, improved their Hebrew proficiency. 2011 Government Social Survey of Israelis shows that 90 percent of Jews and 60 percent of Arabs have a good understanding of Hebrew.
Arabic is not the only secondary language spoken in Israel That same 2011 survey shows that 15 percent of Israelis speak Russian, which is almost as large as the 18 percent that speak Arabic. And yet, we don't see Russian Israelis clamoring to make Russian an official language of Israel. There are multiple countries (e.g., France) where people speak multiple languages, yet only have one official language (CIA Factbook). The concern brought up by critics is that marginalization will result in further marginalization of Israeli Arabs. In spite of Arabic no longer being an official language, the Basic Law still states that it enjoys special status, and that "the formalization of the use of Arabic language in government institutions and before them shall be set in law (§4.B)." The bill does not limit Arabic being used in public writing or services, which means that the practical impact is negligible.
Jerusalem as the Capital of Israel: Another hot-button issue in the Basic Law is that it defines Jerusalem as the complete and undivided capital of Israel (§3). This declaration is nothing new. The Knesset declared this in a Basic Law in 1980. Jerusalem definitionally functions as Israel's capital, yet it is the only capital that is too contentious to actually call a capital in the international community. Not only that, there is so much political and religious significance behind the city itself. What was the coalition government doing by restating this fact? My guess: reminding the Palestinians that dividing up Jerusalem is a non-starter.
Settlements: The one that really gets to critics is the "development of Jewish settlement a national value and will act to further encourage and advance the establishment of such settlement." The idea of Jews settling the land of Israel is also nothing new. This idea dates back to the Palestine Mandate (Article VI), which is an internationally-recognized document from the 1920s. Aside from this precedent, this Section of the Basic Law is establishing it as a value. The concern on this section is that the State of Israel's borders are not defined, which is important since the West Bank and Gaza Strip are legally disputed territories (as opposed to occupied territories). At the same time, Israel's Basic Law does not proscribe specific policies, something that cannot be said for Hawaii's state constitution. It's a provision that is more bark than bite.
Undermining Non-Jewish Citizens?: What was not said was criticized as much as what was said. Critics say that the new Basic Law is troubling because it does not state that Israel is a "Jewish and democratic state," but only that Israel is a Jewish state. The thing is that the Basic Law did not have to because the Knesset already set this precedent. The Israeli government passed a Basic Law in 1992 reaffirming the human dignity and liberty of all Israeli citizens, and to "establish the State of Israel as a Jewish and democratic state." The Knesset reaffirmed this in another Basic Law in 1994. The current Basic Law does not negate previous Basic Laws, and as such, does not infringe upon the rights of any non-Jewish Israelis.
Postscript
Upon examining this Basic Law, it lacks enforceability to have impact on the day-to-day beyond anything negligible. If there is nothing of practical significance, why did this Basic Law become enacted? Why now? I have some theories.
Theory #1: Critics think that this Basic Law will derail peace talks and the two-state solution. The problem is that peace talks have been stalled since April 2014. This could be Israel's attempt at drawing some clear lines in the sand and having the appearance of making some progress in the interim. One clear line is the acceptance that Israel, the Jewish state, does exist and has a right to exist. Such a simple request for a peace agreement: co-exist with your neighbor. Apparently, the Palestinian government is oblivious to such a prerequisite. The other line that Netanyahu is drawing is that the undivided capital of Israel is Jerusalem. Netanyahu doesn't want any of this "West Jerusalem/East Jerusalem" squabbling. Just one Jerusalem under Israeli sovereignty.
Theory #2: This Basic Law is response to the international community, and the BDS movement in particular. Such declarations of a preferred religion, a sole official language, or a certain flag design are mundane....except when the Jewish state does it. Yes, Israel has gotten better on the diplomatic front. Its ties have deepened with such nations as India, the United States, China, and Hungary, to name a few. Even so, there are some countries (e.g., Turkey) that are going to continue to have issues with Israel. In response to outcry from certain members of the international community, Israel is doubling down on what we already know: Israel is decidedly a Jewish state.
Theory #3: Israeli elections are coming up soon, and perhaps Netanyahu needed a legislative win before the next round of Israeli elections came around. Netanyahu is working on solidifying his current base, and possibly increasing it for the next term. The coalition government needed to pass something so it looked like they were effecting change when they were passing feel-good law.
What I can say is that political pandering is happening on both sides. My guess is that Netanyahu wants to take a gamble and hope that playing to Jewish pride and/or anti-Arab sentiment is a win-win. The opposing coalition wants to play it off as the beginning of the end of democracy in order to increase their representation in the Knesset. Anti-Israel individuals want to equate it to apartheid. I analyzed this malicious and slanderous claim six years ago. It wasn't true then, and given that the latest Basic Law is nothing more than nationalistic symbolism, it's not true now that Israel is an apartheid state. This Basic Law is nothing more than politicking and pandering.
I do, however, have a concern: not so much about reality, but about perception. Such a law could act as a reminder that although Israeli Arabs are citizens, they could never fully fit into Israeli society. If Israeli Arabs end up feeling further marginalized from society, it could cause further social strife. That's one way it could play out, but maybe the symbolism could help everyone adjust to the fact that Israel is indeed a Jewish state, and the Jewish aspect is increasingly important for Israeli citizens. If this ends up not being the case, there are elections coming up soon. If the electorate is that angry, they will vote the MKs that make up the coalition and bring in new politicians. Per §11 of this Basic Law, all you need is a supermajority to overturn the Basic Law. The fact that there is a way to use the system to eliminate this Basic Law shows that Israel is still a democracy, and that this is not the beginning of the end of Israeli democracy.
8-14-2018 Addendum: I came across another theory as to why this bill passed. Although there is the theory that the Israeli Right is drifting further to the Right, there is also the possibility that the Israeli Left is drifting further to the Left, far enough to the Left where it is abandoning its former Zionist roots.
Monday, July 30, 2018
Thursday, July 26, 2018
Tisha B'Av: What The Bar Kamtza Story Teaches About Perspective and Decision-Making
Yes, the Jewish fast day of Tisha B'Av ended this past Sunday, but I still have some thoughts from my observance this year. According to Jewish law, Torah study is generally prohibited on Tisha B'Av. This is because Torah is considered a source of happiness, whereas Tisha B'Av is a day where we are supposed to mourn and reflect. There are, however, some exceptions to that general rule. The passages from the Torah and Talmud that our Sages selected were the ones that were sad or depressing, in order to keep with the general mood of the fast day. One such Talmudic passage is in Tractate Gittin 55b-58a. Within that Talmudic passage is the story of Bar Kamtza (Gittin 55b) and how this led to the destruction of the Second Temple. Who was Bar Kamtza, and how did this story lead to such a terrible ending?
According to the Talmud, there was a rich man who had a friend named Kamtza and an enemy named Bar Kamtza. This rich man was going to throw a lavish party, and he wanted to invite his friends. The host told his servant to invite Kamtza. The servant ended up inviting Bar Kamtza by mistake. When Bar Kamzta arrived, the host was furious and wanted Bar Kamtza to leave. Bar Kamtza wanted to stay. He was willing to pay for his own food and drink. He even offered to pay for the whole party. That wasn't adequate for the host. The host was so furious at that point that he literally threw Bar Kamtza out. Bar Kamtza was interestingly angry with the Rabbis who were at the party because they sat there and did nothing. So Bar Kamtza went to the Roman prefect and lied about the Jews rebelling against the prefect. As proof, Bar Kamtza suggested to send the Jews an offering to see if they will accept it. If not, they're rebelling. Bar Kamtza was clever and made a blemish on the cows in such a way that it would not be acceptable under Jewish law. The Rabbis were willing to sacrifice it in order to keep the peace with the Roman government....all except one rabbi. Rabbi Zechariah ben Abkulas didn't want to because he didn't want to set bad precedent in terms of ritual. The same Rabbi spoke against killing Bar Kamza. Ultimately, the Rabbis did not sacrifice the animals. As a result, the Roman prefect got angry, destroyed the Second Temple, and exiled the Jews from the land of Israel.
While the story is an intriguing one, it leaves a lot to be desired because details are missing. Why are the host and Bar Kamtza on bad enough terms where the host felt the innate need to kick him out? Why did Bar Kamtza feel the need to punish the Rabbis instead of the person who publicly embarrassed him? Why did the rest of the Rabbis give into Rabbi Zechariah? Looking at the story, I have to wonder if there really is one person to blame. On this Tisha B'Av, my synagogue held a Tikkun Bar Kamtza, a sort of learning session to analyze the story and understand where each character was coming from. It's with that mindset I would like to proceed with analysis of the story and characters.
The Host's Perspective: The Talmud uses the word דבביה to describe Bar Kamtza. While it is commonly translated as "enemy," the Aramaic has a connotation of "one who speaks bad about others." With that in mind, perhaps the host did not want Bar Kamtza at the party because Bar Kamzta had already spoken ill of the host, so ill that Bar Kamtza's presence was a true trigger. Alternatively, perhaps the host was worried that Bar Kamtza would be gossiping at the party, and the host wanted none of that. The host might have felt the need to throw out Bar Kamtza because he felt insulted that he could have his friendship or self-respect bought off. On the other hand, perhaps he was so petty and had his ego so damaged that he didn't want to hear any of it.
Bar Kamtza's Perspective: There are some ways to look at Bar Kamtza. One is that he is so superficial that he buys friends off, and that he is so insecure that he needs to harm the entire Jewish people to satiate his ego. Here is another possibility. Maybe Bar Kamtza realized that he was out of line, and maybe he saw the invitation as an olive branch and an opportunity to reconcile with the host. And when Bar Kamtza arrived, he was so shocked both by the host's behavior and the Rabbis' indifference that he lost faith in a religion that is supposed to have a higher ethical standard. Bar Kamtza might have gone to the Roman authorities because the religious authorities hurt him one time too many.
The Rabbis' Perspective: The Rabbis need further examination, as well. It is possible that the Rabbis gave into bystander effect because they're human like everyone else. It is also possible that the Rabbis previously tried to intercede to no avail, and they did not want to get further involved because they knew that rebuking without influence is not only futile, but against Jewish law (Talmud, Yevamot 65b). It is also possible that the Rabbis were keeping calm as not to cause a panic because people look towards their spiritual leaders for guidance on how to act and how not to act.
And yet there's another take I have for the rabbis' perspective: weak leadership. The Rabbis didn't want to say anything at the party because they didn't want to be controversial. When the Romans presented the offering, the Rabbis didn't want to make any waves, even though the sacrifice would have been performed behind closed doors and the masses would have not known the difference. In part, I think the reason is that the Rabbis were overly obsessed with ritual minutiae without seeing the bigger picture. It wouldn't be the first time in Jewish history in which the means were conflated with the ends, especially with regards to sacrifices.
And there is yet another reason I think this is weak leadership. In the Talmudic passage, R. Yochanan doesn't blame Bar Kamtza, but rather R. Zechariah ben Abkulas for his [excessive] humility. The Talmud uses the word ענוותנותו to describe humility. I brought the definition up before when discussing Moses' humility. But in Hebrew, "humility" doesn't mean meek or self-deprecating. "Humility" means an honest sense of self-awareness, a mentality of "no less than my place, no more than my space." That means if the Talmud is attributing this word to R. Zechariah, then he knew that he was in no position to be making decisions. What's even worse is that the Rabbis of the time were so weak that they were incapable of foreseeing the outcome, which is bad because foresight is what the Talmud defines wisdom as (Tamid, 32a).
Postscript
George Santayana said that those who do not learn from history are doomed to repeat it. The story might be about two millennia old, but the story of Bar Kamtza has important lessons about Judaism and life more generally:
According to the Talmud, there was a rich man who had a friend named Kamtza and an enemy named Bar Kamtza. This rich man was going to throw a lavish party, and he wanted to invite his friends. The host told his servant to invite Kamtza. The servant ended up inviting Bar Kamtza by mistake. When Bar Kamzta arrived, the host was furious and wanted Bar Kamtza to leave. Bar Kamtza wanted to stay. He was willing to pay for his own food and drink. He even offered to pay for the whole party. That wasn't adequate for the host. The host was so furious at that point that he literally threw Bar Kamtza out. Bar Kamtza was interestingly angry with the Rabbis who were at the party because they sat there and did nothing. So Bar Kamtza went to the Roman prefect and lied about the Jews rebelling against the prefect. As proof, Bar Kamtza suggested to send the Jews an offering to see if they will accept it. If not, they're rebelling. Bar Kamtza was clever and made a blemish on the cows in such a way that it would not be acceptable under Jewish law. The Rabbis were willing to sacrifice it in order to keep the peace with the Roman government....all except one rabbi. Rabbi Zechariah ben Abkulas didn't want to because he didn't want to set bad precedent in terms of ritual. The same Rabbi spoke against killing Bar Kamza. Ultimately, the Rabbis did not sacrifice the animals. As a result, the Roman prefect got angry, destroyed the Second Temple, and exiled the Jews from the land of Israel.
While the story is an intriguing one, it leaves a lot to be desired because details are missing. Why are the host and Bar Kamtza on bad enough terms where the host felt the innate need to kick him out? Why did Bar Kamtza feel the need to punish the Rabbis instead of the person who publicly embarrassed him? Why did the rest of the Rabbis give into Rabbi Zechariah? Looking at the story, I have to wonder if there really is one person to blame. On this Tisha B'Av, my synagogue held a Tikkun Bar Kamtza, a sort of learning session to analyze the story and understand where each character was coming from. It's with that mindset I would like to proceed with analysis of the story and characters.
The Host's Perspective: The Talmud uses the word דבביה to describe Bar Kamtza. While it is commonly translated as "enemy," the Aramaic has a connotation of "one who speaks bad about others." With that in mind, perhaps the host did not want Bar Kamtza at the party because Bar Kamzta had already spoken ill of the host, so ill that Bar Kamtza's presence was a true trigger. Alternatively, perhaps the host was worried that Bar Kamtza would be gossiping at the party, and the host wanted none of that. The host might have felt the need to throw out Bar Kamtza because he felt insulted that he could have his friendship or self-respect bought off. On the other hand, perhaps he was so petty and had his ego so damaged that he didn't want to hear any of it.
Bar Kamtza's Perspective: There are some ways to look at Bar Kamtza. One is that he is so superficial that he buys friends off, and that he is so insecure that he needs to harm the entire Jewish people to satiate his ego. Here is another possibility. Maybe Bar Kamtza realized that he was out of line, and maybe he saw the invitation as an olive branch and an opportunity to reconcile with the host. And when Bar Kamtza arrived, he was so shocked both by the host's behavior and the Rabbis' indifference that he lost faith in a religion that is supposed to have a higher ethical standard. Bar Kamtza might have gone to the Roman authorities because the religious authorities hurt him one time too many.
The Rabbis' Perspective: The Rabbis need further examination, as well. It is possible that the Rabbis gave into bystander effect because they're human like everyone else. It is also possible that the Rabbis previously tried to intercede to no avail, and they did not want to get further involved because they knew that rebuking without influence is not only futile, but against Jewish law (Talmud, Yevamot 65b). It is also possible that the Rabbis were keeping calm as not to cause a panic because people look towards their spiritual leaders for guidance on how to act and how not to act.
And yet there's another take I have for the rabbis' perspective: weak leadership. The Rabbis didn't want to say anything at the party because they didn't want to be controversial. When the Romans presented the offering, the Rabbis didn't want to make any waves, even though the sacrifice would have been performed behind closed doors and the masses would have not known the difference. In part, I think the reason is that the Rabbis were overly obsessed with ritual minutiae without seeing the bigger picture. It wouldn't be the first time in Jewish history in which the means were conflated with the ends, especially with regards to sacrifices.
And there is yet another reason I think this is weak leadership. In the Talmudic passage, R. Yochanan doesn't blame Bar Kamtza, but rather R. Zechariah ben Abkulas for his [excessive] humility. The Talmud uses the word ענוותנותו to describe humility. I brought the definition up before when discussing Moses' humility. But in Hebrew, "humility" doesn't mean meek or self-deprecating. "Humility" means an honest sense of self-awareness, a mentality of "no less than my place, no more than my space." That means if the Talmud is attributing this word to R. Zechariah, then he knew that he was in no position to be making decisions. What's even worse is that the Rabbis of the time were so weak that they were incapable of foreseeing the outcome, which is bad because foresight is what the Talmud defines wisdom as (Tamid, 32a).
Postscript
George Santayana said that those who do not learn from history are doomed to repeat it. The story might be about two millennia old, but the story of Bar Kamtza has important lessons about Judaism and life more generally:
- When we interact with others, we think we have the full picture. The truth is that even when we think we do, we don't. I think there were certain details omitted intentionally to remind us that in our interpersonal interactions, our knowledge is more incomplete than we think. This is why we need to take other perspectives into view and have a broader view.
- While necessary, empathy is not enough to fully understand. In order to do so, you need to be mindful enough to take the other's perspective and walk in their shoes (Pirke Avot 2:4) to the point where you can "argue it from their side." This is not to say that you ultimately end up agreeing with the other person, but having their perspective in mind goes a long way.
- When making a big decision, especially one that affects the fate of an entire people, make sure you keep your eye on the forest instead of obsessing over one little sapling.
- We should not practice a ritual for its own sake and have it void of spirituality. This is especially true if that needless obsession over minutiae means having the occupying rule come after the Jewish people, destroy the Temple, and force them into exile.
- Maybe the reason why the Talmudic story doesn't mention why the fight started between the host and Bar Kamtza in the first place is because it doesn't matter. Even if Bar Kamtza did something horrid prior to the party, two wrongs still don't make a right, not to mention that Jewish law teaches that rebuke is supposed to take place privately (Maimonides, Mishneh Torah, De'ot, 6:7).
- As R. Zechariah ben Abkulas illustrates, the worst choice you can make in life is not making a choice at all. Going for the path of least resistance can get you in all sorts of trouble because it means you are no longer able to exert control.
- Our words have the potential to do great harm or great good. Even if it is in more everyday interactions, we have the choice to use our words to uplift others instead of rejecting and bringing others down.
Monday, July 23, 2018
President Trump, Please Stop the Trade War with China Before You Get Us in a Recession
Ever since Donald Trump started his presidential campaign, he has made it a part of his platform to demonize China. Trump went as far as saying that Chinese trade policy is akin to raping the United States. Although Trump broke his campaign promise to declare China a currency manipulator (even if they were, not a big deal), he has gone after China hard. This year, Trump has taken his protectionist trade policy seriously. Earlier this year, I rebuked Trump for his tariffs on solar panels, as well as on aluminum and steel. I thought that was going to have an adverse enough of an effect on the economy. It was a moment I thought that Trump was not going to pursue further protectionist trade policy. I was wrong. Last month, he enacted a 25 percent tariff on $50 billion worth of Chinese goods. China unsurprisingly responds in kind. Then Trump went to a 10 percent tariff on $200 billion worth of goods (see analysis here). You think he would have stopped there, but he did not. Late last week, Trump threatened to put tariffs on all $500 billion-plus of Chinese goods. Trump thinks he is in the right because, as his administration reports, China's intellectual property theft has been costing the United States $600 billion per year. Aside from retaliating against China for this theft, Trump has also made arguments about national security and trade deficits. Is history going to look kindly on the trade war that Trump has started with China?
Cost to Consumers: The American Action Forum found that Trump's 25 percent tariff on the $50 billion would cost consumers $11.5 billion a year. With the modified $200 billion in tariffs, that net cost to consumers increased to $31.5 billion a year. Looking at the washing machine tariff specifically, prices increased 16.4 percent from February to May 2018, which is the largest increase we have seen in the past 40 years. It is not at an all-time high, but it another piece of the puzzle showing how tariffs affect consumers. Steel prices have also increased since Trump enacted the steel tariffs. The New York Times estimates that if a 10 percent tariff were enacted on all Chinese goods, it would cost households an average of $270 annually. Although this might not seem like a terribly large amount, lower-income households could feel the squeeze because they are more likely to purchase Chinese products than their higher-income counterparts.
GDP Loss: Consultancy Capital Economics predicts that in the long-run, the global GDP will drop 2-3 percent (and the U.S. GDP 1 percent) more than it would without the trade war. Capital Economics is not the only one with such a prediction. The Wharton School of Business, which happens to be the alma mater of President Trump, predicts that an all-out trade war would reduce the GDP by 0.9 percent relative to status quo by 2027, and 5.3 percent by 2040. The Tax Foundation has a less dire prediction than Wharton, at a decrease of 0.47 percent. As for the Chinese GDP, there is to be an anticipated decrease by 0.1 or 0.2 percent points in the next decade.
Negative Impact on U.S. Businesses: The St. Louis Federal Reserve expressed concern over the prevalence in which U.S. manufacturers use Chinese intermediate inputs in their manufacturing (see below). The cost to businesses goes beyond the immediate price tag of tariffs. There is also the reality that altering supply chains will be time-consuming and costly. These tariffs are going to hit multinational supply chains hard and make it more difficult for the United States to compete in global markets (Lovely and Yang Liang, 2018).
Lower Wages: There are multiple ways that a business can absorb the costs of a tariff, one of them being to cut wages and benefits of workers. The Wharton study mentioned earlier found that wages will fall 1.7 percent by 2027 relative to status quo, and 4.9 percent by 2040.
Lower Employment: For those employers who cannot sustain the tariffs with mere wage cuts, they will go to cutting jobs. If Trump goes all-in on the trade war, the Tax Foundation estimates a loss of 346,786 jobs. This is unsurprising since this has happened with other tariffs, most recently with Trump's steel tariffs. If Trump implements the auto tariff he proposed back in May, that would mean another 195,000 jobs lost in one to three years (Robinson et al., 2018).
Other Long-Term Effects: You might look at the figures above and say that it's not a big deal. "After all, the U.S. economy has a GDP of over $19 trillion. It can handle these tariffs." It is not solely about the short-term impacts I covered above, but also crowding out private investment, reducing consumer confidence, diminishing foreign investment flows into the United States, creating larger external deficits, and creating a level of trade policy uncertainty that we have not seen this century. The Federal Reserve expressed concerns last month about how tariffs are diminishing foreign investment and capital spending. These are the exact sort of economic effects and conditions that slow down economic growth and have a high likelihood of dragging the United States into a recession, which could very well have a contagion effect that drags down other economics down along with the United States.
Conclusion
What should be more worrisome about the sources I cite above are just what research has been produced and released in 2018 alone. I have covered the topic of tariffs before (see here and here). Between economic theory, near unanimity among economists, and the abundance of empirical evidence showing how badly tariffs screw over so many people in many ways, including higher prices, lower wages, lower levels of unemployment, lower economic output, and less economic stability. In case a damning amount of evidence is not enough, the arguments that Trump uses for intellectual property theft, against trade deficits, or for national security to justify the tariffs are flimsy at best, and economically illiterate and deleterious at worst.
Trump's trade war goes beyond retaliatory tariffs on China. Trump labeled the European Union a commercial foe. Trump is even going after Canada and other allies with tariffs. Trump threatened to withdraw from NAFTA. While imperfect, NAFTA has created net benefits, and such withdrawal would mess with North American trade. Trump also reportedly wants to withdraw from the World Trade Organization (WTO), which would diminish the ability to resolve international trade disputes. Between withdrawing from the Trans-Pacific Partnership and these tariffs, Trump is giving China better leverage to strengthen trade relations with China's neighbors while diminishing U.S.-Asian trade.
I'm not here to say that China's compliance with WTO standards have been perfect because it has not. China should be held accountable, which is why we have the WTO. Tangentially, what also worries me is what China could do beyond tit-for-tat, retaliatory tariffs: they could more heavily regulate U.S. companies in China, cut off trade on rare earth metals, or sell of the $1.7T in U.S. Treasury bonds it's holding, thereby increasing interest rates. Trade escalation such as what we are seeing now has never boded well for the United States.
I would like to see a bilateral trade agreement with China or at least for the United States to use the WTO Dispute Settlement Process because either would be an example of a preferred policy alternative. However, I am not hopeful of that. We have a bigger issue, and that is a zero-sum mentality on trade when it is, in fact, positive-sum. Protectionism is stupid and immoral, plain and simple. It is the sort of thing that should have died in the 20th century along with Nazism and Communism. If this trade war goes full-blown, history will not be kind to Trump or the legislators who stood by idly as this atrocity took place. I hope Trump comes to his senses or that Congress exercises its constitutional right of setting tariffs to stop Trump from this insanity.
12-4-2018 Update: The Tax Foundation recently ran its data on what the impact of Trump's tariffs on China are. If Trump imposes the 25 percent tariff on all Chinese goods, then it will cause an additional loss of 65,000 jobs and cost $21B to the GDP, which is on top of the damage the current tariffs are causing. Hopefully, Trump and Xi can work out some sort of ceasefire so they can stop causing damage to the global economy.
4-22-2019 Update: The University of Chicago recently released a paper on Trump's tariffs on washing machines. The tariffs brought in $82 million of revenue last year while raising consumer prices of $1.5 billion (or about $92 per washer). This means that the 1,800 washer production jobs created cost about $817,000 per job.
Cost to Consumers: The American Action Forum found that Trump's 25 percent tariff on the $50 billion would cost consumers $11.5 billion a year. With the modified $200 billion in tariffs, that net cost to consumers increased to $31.5 billion a year. Looking at the washing machine tariff specifically, prices increased 16.4 percent from February to May 2018, which is the largest increase we have seen in the past 40 years. It is not at an all-time high, but it another piece of the puzzle showing how tariffs affect consumers. Steel prices have also increased since Trump enacted the steel tariffs. The New York Times estimates that if a 10 percent tariff were enacted on all Chinese goods, it would cost households an average of $270 annually. Although this might not seem like a terribly large amount, lower-income households could feel the squeeze because they are more likely to purchase Chinese products than their higher-income counterparts.
GDP Loss: Consultancy Capital Economics predicts that in the long-run, the global GDP will drop 2-3 percent (and the U.S. GDP 1 percent) more than it would without the trade war. Capital Economics is not the only one with such a prediction. The Wharton School of Business, which happens to be the alma mater of President Trump, predicts that an all-out trade war would reduce the GDP by 0.9 percent relative to status quo by 2027, and 5.3 percent by 2040. The Tax Foundation has a less dire prediction than Wharton, at a decrease of 0.47 percent. As for the Chinese GDP, there is to be an anticipated decrease by 0.1 or 0.2 percent points in the next decade.
Negative Impact on U.S. Businesses: The St. Louis Federal Reserve expressed concern over the prevalence in which U.S. manufacturers use Chinese intermediate inputs in their manufacturing (see below). The cost to businesses goes beyond the immediate price tag of tariffs. There is also the reality that altering supply chains will be time-consuming and costly. These tariffs are going to hit multinational supply chains hard and make it more difficult for the United States to compete in global markets (Lovely and Yang Liang, 2018).
Lower Wages: There are multiple ways that a business can absorb the costs of a tariff, one of them being to cut wages and benefits of workers. The Wharton study mentioned earlier found that wages will fall 1.7 percent by 2027 relative to status quo, and 4.9 percent by 2040.
Lower Employment: For those employers who cannot sustain the tariffs with mere wage cuts, they will go to cutting jobs. If Trump goes all-in on the trade war, the Tax Foundation estimates a loss of 346,786 jobs. This is unsurprising since this has happened with other tariffs, most recently with Trump's steel tariffs. If Trump implements the auto tariff he proposed back in May, that would mean another 195,000 jobs lost in one to three years (Robinson et al., 2018).
Other Long-Term Effects: You might look at the figures above and say that it's not a big deal. "After all, the U.S. economy has a GDP of over $19 trillion. It can handle these tariffs." It is not solely about the short-term impacts I covered above, but also crowding out private investment, reducing consumer confidence, diminishing foreign investment flows into the United States, creating larger external deficits, and creating a level of trade policy uncertainty that we have not seen this century. The Federal Reserve expressed concerns last month about how tariffs are diminishing foreign investment and capital spending. These are the exact sort of economic effects and conditions that slow down economic growth and have a high likelihood of dragging the United States into a recession, which could very well have a contagion effect that drags down other economics down along with the United States.
Conclusion
What should be more worrisome about the sources I cite above are just what research has been produced and released in 2018 alone. I have covered the topic of tariffs before (see here and here). Between economic theory, near unanimity among economists, and the abundance of empirical evidence showing how badly tariffs screw over so many people in many ways, including higher prices, lower wages, lower levels of unemployment, lower economic output, and less economic stability. In case a damning amount of evidence is not enough, the arguments that Trump uses for intellectual property theft, against trade deficits, or for national security to justify the tariffs are flimsy at best, and economically illiterate and deleterious at worst.
Trump's trade war goes beyond retaliatory tariffs on China. Trump labeled the European Union a commercial foe. Trump is even going after Canada and other allies with tariffs. Trump threatened to withdraw from NAFTA. While imperfect, NAFTA has created net benefits, and such withdrawal would mess with North American trade. Trump also reportedly wants to withdraw from the World Trade Organization (WTO), which would diminish the ability to resolve international trade disputes. Between withdrawing from the Trans-Pacific Partnership and these tariffs, Trump is giving China better leverage to strengthen trade relations with China's neighbors while diminishing U.S.-Asian trade.
I'm not here to say that China's compliance with WTO standards have been perfect because it has not. China should be held accountable, which is why we have the WTO. Tangentially, what also worries me is what China could do beyond tit-for-tat, retaliatory tariffs: they could more heavily regulate U.S. companies in China, cut off trade on rare earth metals, or sell of the $1.7T in U.S. Treasury bonds it's holding, thereby increasing interest rates. Trade escalation such as what we are seeing now has never boded well for the United States.
I would like to see a bilateral trade agreement with China or at least for the United States to use the WTO Dispute Settlement Process because either would be an example of a preferred policy alternative. However, I am not hopeful of that. We have a bigger issue, and that is a zero-sum mentality on trade when it is, in fact, positive-sum. Protectionism is stupid and immoral, plain and simple. It is the sort of thing that should have died in the 20th century along with Nazism and Communism. If this trade war goes full-blown, history will not be kind to Trump or the legislators who stood by idly as this atrocity took place. I hope Trump comes to his senses or that Congress exercises its constitutional right of setting tariffs to stop Trump from this insanity.
12-4-2018 Update: The Tax Foundation recently ran its data on what the impact of Trump's tariffs on China are. If Trump imposes the 25 percent tariff on all Chinese goods, then it will cause an additional loss of 65,000 jobs and cost $21B to the GDP, which is on top of the damage the current tariffs are causing. Hopefully, Trump and Xi can work out some sort of ceasefire so they can stop causing damage to the global economy.
4-22-2019 Update: The University of Chicago recently released a paper on Trump's tariffs on washing machines. The tariffs brought in $82 million of revenue last year while raising consumer prices of $1.5 billion (or about $92 per washer). This means that the 1,800 washer production jobs created cost about $817,000 per job.
Thursday, July 19, 2018
"Abolish ICE" Was Unable to Get Traction: Should We Care?
Immigration has been at the forefront of the political world in a way we have not seen in a number of years. President Trump has pursued everything from the border wall and a refugee ban to trying to ban those under DACA or Temporary Protected Status. The political climate on immigration has become so escalated that the Democrats introduced legislation to "Abolish ICE." What is ICE? The United States Immigration and Customs Enforcement (ICE) is responsible for enforcing the laws concerning trade, border control, and immigration to promote homeland security. "Abolish ICE" started to take off when the family separation issue became headline news. We can bypass the fact that it is Custom and Borders Protection (CBP) that has been responsible for family separation. What we see is an increasingly polarized environment, both generally and specifically with regards to immigration.
What is intriguing about the "Abolish ICE" scenario is that the Republicans wanted to pass the bill introduced by the Democrats. Considering the upcoming midterm elections, the intrigue is that the Republicans are calling the bluff on the Democrats trying to make immigration an election issue. After all, a Politico poll found that 54 percent of Americans are against abolishing ICE, with an additional 21 percent unsure. Even more interesting is the fact the Democrats are not going to vote for their own bill. It was political grandstanding. Since the Democrats are abandoning the bill, I would conjecture that the "Abolish ICE" debacle is not going to have a sizable impact on the election in either direction.
Nevertheless, I can understand why the Left has the sentiment of "Abolish ICE." Trump has a highly restrictionist immigration policy that is reminiscent of the 1920s. The effects of reducing immigration, regardless of legal or not, are net negative. Plus, the creation of ICE created another issue: creating a department that views immigration primarily as a national security threat shifts the mentality from immigrants being friends to that of foes. This mentality is contrary to the reality of immigrants. Immigrants are such a non-threat to native citizens that a native citizen is 4,000 times more likely to be stuck by lighting than killed by an immigrant. Immigrants are not even a fiscal drain vis-à-vis welfare usage. Immigrants are not a threat to national security or the economy. Far from it! They actually provide net benefit to the native country. Both low-skilled and high-skilled immigrants help boost the GDP and provide a net increase in jobs.
Until the mentality on immigration and immigrants changes in the federal government, not much is going to change. Even if ICE were abolished, what would happen? The responsibilities would be transferred to another agency, and abolishing ICE would merely be an expensive, empty symbol. I'm a fan of the Cato Institute's two-pronged plan, which assumes that the policy goal is to remove hardened criminal immigrants while removing the fear from the otherwise law-abiding immigrants. Step one is to abolish immigration crimes. The second step is to transfer some of the Homeland Security Investigations' (HSI) responsibilities to the Enforcement and Removal Operations (ERO) and abolish the latter organization. I doubt that these specific reforms would be made under the current Congress. The reason why I still care is because the tenor of the conversation on immigration is too politicized. Abolishing ICE is unpopular, but supporting immigration is at an all-time high (Gallup). I know that we live in a politically charged and partisan time, but if the parties could actually reach across the aisle, there could be some real immigration reform that takes into account border security and making sure that the American Dream is accessible to immigrants.
What is intriguing about the "Abolish ICE" scenario is that the Republicans wanted to pass the bill introduced by the Democrats. Considering the upcoming midterm elections, the intrigue is that the Republicans are calling the bluff on the Democrats trying to make immigration an election issue. After all, a Politico poll found that 54 percent of Americans are against abolishing ICE, with an additional 21 percent unsure. Even more interesting is the fact the Democrats are not going to vote for their own bill. It was political grandstanding. Since the Democrats are abandoning the bill, I would conjecture that the "Abolish ICE" debacle is not going to have a sizable impact on the election in either direction.
Nevertheless, I can understand why the Left has the sentiment of "Abolish ICE." Trump has a highly restrictionist immigration policy that is reminiscent of the 1920s. The effects of reducing immigration, regardless of legal or not, are net negative. Plus, the creation of ICE created another issue: creating a department that views immigration primarily as a national security threat shifts the mentality from immigrants being friends to that of foes. This mentality is contrary to the reality of immigrants. Immigrants are such a non-threat to native citizens that a native citizen is 4,000 times more likely to be stuck by lighting than killed by an immigrant. Immigrants are not even a fiscal drain vis-à-vis welfare usage. Immigrants are not a threat to national security or the economy. Far from it! They actually provide net benefit to the native country. Both low-skilled and high-skilled immigrants help boost the GDP and provide a net increase in jobs.
Until the mentality on immigration and immigrants changes in the federal government, not much is going to change. Even if ICE were abolished, what would happen? The responsibilities would be transferred to another agency, and abolishing ICE would merely be an expensive, empty symbol. I'm a fan of the Cato Institute's two-pronged plan, which assumes that the policy goal is to remove hardened criminal immigrants while removing the fear from the otherwise law-abiding immigrants. Step one is to abolish immigration crimes. The second step is to transfer some of the Homeland Security Investigations' (HSI) responsibilities to the Enforcement and Removal Operations (ERO) and abolish the latter organization. I doubt that these specific reforms would be made under the current Congress. The reason why I still care is because the tenor of the conversation on immigration is too politicized. Abolishing ICE is unpopular, but supporting immigration is at an all-time high (Gallup). I know that we live in a politically charged and partisan time, but if the parties could actually reach across the aisle, there could be some real immigration reform that takes into account border security and making sure that the American Dream is accessible to immigrants.
Monday, July 16, 2018
NATO Spending Commitments and a Brief Look at NATO's Future
Last week, President Trump went to Brussels to attend a summit for the North Atlantic Treaty Organization (NATO). Allies within NATO are feeling unease, at least in part because President Trump continued to accuse allies of free-riding and not "paying their fair share towards NATO." During his summit, he accused NATO allies of being delinquent in paying towards NATO, which is false. While Trump lambasted allies for not paying the 2 percent commitment, it would behoove him to realize that when the countries agreed that they would expend 2 percent of their GDP towards military spending by 2024, which was a non-binding agreement until the Crimean escalation in 2014. The interesting thing is even if a) everyone put in 2 percent (thereby increasing military outlays by $114 billion) and b) the United States, for some reason, matched it with the corresponding $114 billion decrease in military spending, it would have reduced the U.S. military budget by 16 percent. The United States would still have had 3 percent of its GDP be spent on military spending, which is higher than other NATO countries.
This gets to the question of the day: In spite of the fact that European allies have been increasing their military spending, is the United States spending so much more for NATO than its partners? If you look at overall military expenditure, then the United States is responsible for 70 percent among NATO members. As NATO itself admits, this imbalance in indirect spending has existed throughout NATO's history, so it's not like it's anything new. Yes, spending over $600 billion on military expenditures is costly for the United States government. However, this figure does not refer to NATO expenses or expenses the United States spends on European defense. The International Institute for Strategic Studies (IISS) puts U.S. military spending towards Europe in context. The United States contributes just $685 million to NATO common funding (or 22 percent). Including equipment procurement, U.S. funding for NATO capability puts the figure at $6.8 billion for 2018. If we look at total U.S. spending on European defense, it goes up to $30 billion, which is less than NATO European defense spending of $230.8 billion (see below). When looking at direct spending on European defense, the United States plays a small role than Trump purports.
Even so, I would still contend that the United States plays a vital role for NATO. Without the United States, NATO would be a hollow shell of its former self. At the same time, I do wonder if NATO can hold itself together. As the American Enterprise Institute points out, security alliances such as NATO normally don't last this long; NATO's longevity is an anomaly. Security alliances and security priorities can and do shift. In spite of my wishes, the United States continues to play the role of global policeman. With multiple areas to focus on, the United States cannot focus on Europe like it once did. What if the United States decided to put more money into the Middle East or dealing with China because Trump ended up escalating from a trade war to using military force against China? If Trump goes after China, Europe would have to reconsider its current ties with China. Plus, if Trump is serious about shifting national security priorities, he might be increasing pressure to help make sure that the United States can both maintain NATO and pursue other national security priorities.
Given that the composition of NATO has shifted since its founding in 1947, as has the prioritization of national security for allied countries, I think there needs to be reform if NATO wants to last. Trump is making it clear that NATO is not going to be doing "business as usual." There is one other thing to consider. Even if Trump exaggerates the U.S.' commitment to NATO, one could make the case for greater military spending in Europe. The Euro Zone is having a harder time holding it together. Various European countries are dealing with greater extremes amongst political parties. Russia is slowly but surely reasserting its assertiveness on the European continent. Greater instability in Europe bolsters the argument for NATO, especially since history has shown us what an unstable Europe leads to, especially when Europe is the United States' largest trade and military partner.
How will NATO's future end up? If I knew, I would be a very rich man. Alas, clairvoyance is beyond me. What I do know is that there is enough going on that the status quo and prevalence of NATO is not going to be what it once was.
This gets to the question of the day: In spite of the fact that European allies have been increasing their military spending, is the United States spending so much more for NATO than its partners? If you look at overall military expenditure, then the United States is responsible for 70 percent among NATO members. As NATO itself admits, this imbalance in indirect spending has existed throughout NATO's history, so it's not like it's anything new. Yes, spending over $600 billion on military expenditures is costly for the United States government. However, this figure does not refer to NATO expenses or expenses the United States spends on European defense. The International Institute for Strategic Studies (IISS) puts U.S. military spending towards Europe in context. The United States contributes just $685 million to NATO common funding (or 22 percent). Including equipment procurement, U.S. funding for NATO capability puts the figure at $6.8 billion for 2018. If we look at total U.S. spending on European defense, it goes up to $30 billion, which is less than NATO European defense spending of $230.8 billion (see below). When looking at direct spending on European defense, the United States plays a small role than Trump purports.
Even so, I would still contend that the United States plays a vital role for NATO. Without the United States, NATO would be a hollow shell of its former self. At the same time, I do wonder if NATO can hold itself together. As the American Enterprise Institute points out, security alliances such as NATO normally don't last this long; NATO's longevity is an anomaly. Security alliances and security priorities can and do shift. In spite of my wishes, the United States continues to play the role of global policeman. With multiple areas to focus on, the United States cannot focus on Europe like it once did. What if the United States decided to put more money into the Middle East or dealing with China because Trump ended up escalating from a trade war to using military force against China? If Trump goes after China, Europe would have to reconsider its current ties with China. Plus, if Trump is serious about shifting national security priorities, he might be increasing pressure to help make sure that the United States can both maintain NATO and pursue other national security priorities.
Given that the composition of NATO has shifted since its founding in 1947, as has the prioritization of national security for allied countries, I think there needs to be reform if NATO wants to last. Trump is making it clear that NATO is not going to be doing "business as usual." There is one other thing to consider. Even if Trump exaggerates the U.S.' commitment to NATO, one could make the case for greater military spending in Europe. The Euro Zone is having a harder time holding it together. Various European countries are dealing with greater extremes amongst political parties. Russia is slowly but surely reasserting its assertiveness on the European continent. Greater instability in Europe bolsters the argument for NATO, especially since history has shown us what an unstable Europe leads to, especially when Europe is the United States' largest trade and military partner.
How will NATO's future end up? If I knew, I would be a very rich man. Alas, clairvoyance is beyond me. What I do know is that there is enough going on that the status quo and prevalence of NATO is not going to be what it once was.
Thursday, July 12, 2018
How Environmentalists Are Grasping at Straws With a Plastic Straw Ban
Early last week, Seattle became the first major city in the U.S. to ban plastic straws in food-service establishments, as well as plastic utensils and plastic cups. These establishments are now responsible for finding alternatives to plastic straws. Non-compliance could end up costing $250 in fines. This policy is meant to address the increasing amount of marine plastic pollution that has ended up in the ocean. Plastic is a particular issue because it is not biodegradable, i.e., it does not break into compounds that can be easily reused. Globally, 275 metric tons of plastic waste is generated every year, 4 to 12 million metric tons of which goes into the ocean (Jambeck et al., 2015). The goal of a plastic straw ban is to minimize the impact that our consumption has on our oceans. Because of these environmental concerns, the European Union, Vancouver, the United Kingdom, California, and New York City are all considering plastic straw bans.
Let's partake in a thought exercise here for a moment. Let's assume that we could get all 50 states in the U.S. to ban plastic straws right now. What would be the impact? Would it tackle the issue of marine plastic pollution like plastic straw ban proponents would like? I actually have a few reasons to be skeptical of success:
Straws as a percent of overall marine plastic pollution: First, it would be prudent to ask how many straws are in our oceans right now. Estimates put it at 4 percent of the plastic trash in oceans in terms of number of pieces. However, we have to remember that plastic straws are very light. In terms of tonnage, plastic straws make up 2,000 out of 9,000,000 tons, or 0.2 percent. Bloomberg had a similar estimation of 0.3 percent of all ocean plastic. That means if we were to stop producing plastic straws and were able to remove all plastic straws from the ocean, it would have such a minimal effect on the issue at hand. The effect of plastic straws in the ocean is metaphorically a drop in the ocean when comparing it to the total tonnage of plastic that makes it out into the oceans. So what is a major contributor to marine plastic pollution? According to one recent study, 46 percent of plastic waste in the ocean is from a single product: fishing nets (Lebreton et al., 2018).
The United States' contribution to marine plastic pollution: This goes back to the question of "how much does the United States [or the developed world] contributes to marine plastic pollution." The answer? The United States is responsible for 0.9 percent of marine plastic pollution (Jambeck et al., 2015), even though it accounts for about 5 percent of the global population. Assuming that the 0.9 percent proportionality carries over to the 0.3 of marine plastic pollution that is plastic straws, that would mean that U.S. straws are only responsible for 0.27 percent of marine plastic pollution. Even if the United States were responsible for all marine plastic pollution related to plastic straws (which it is not), then that would still only account for 0.3 percent of all marine plastic pollution. If the United States is not responsible for marine plastic pollution, who is? China is the largest culprit, at 28 percent (Jambeck et al., 2015). China, Indonesia, Philippines, Vietnam, and Sri Lanka account for nearly 60 percent of marine plastic pollution.
Will a plastic straw ban encourage better consumption habits?: Environmentalists are counting on there being a positive spillover effect to motivate people to reconsider their plastics consumption. I question the spillover effect on two fronts.
Past Plastic Bans
The first is that plastic straws are not the first plastic item that has been taxed or banned to incentivize better consumption patterns. The government creating interventionist policies for plastic bags have existed since 1994. California was the first U.S. state to do so in 2007. There have also been taxes and bans on plastic microbeads since 2014 (Xanthos and Walter, 2017). I don't automatically dismiss the possibility that a plastic straw ban could help shift consumption patterns. At the same time, the question that needs to be asked is "What would make a plastic straw ban different from past plastic product bans?"
Feel-Good Public Policy
Milton Friedman was famous for saying that "One of the great mistakes is to judge policies and programs on their intentions rather than their results." That quote decidedly applies here. The question is whether people can feel good enough about it to change their habits, but not so good where it creates a euphoria from slacktivism. As already established, removing all plastic straws from the ocean and desisting from plastic straw usage does not solve the problem of marine plastic pollution by a long shot. This is not the only time this feel-good policy would come into fruition. People who by fair trade goods think they are helping out "the little guy" in developing countries. However, an understanding of the value chain would show that it is helping out the big guy, not to mention that it does not help end the cycle of poverty in these countries. There are those who feel better when they "buy local." If you prefer it, fine, but if you think you're saving the world, you're not. There are those who eat organic only either because it's healthier or because it's saving the environment. The problem with that is neither one of those reasons can withstand scrutiny. The last thing we need is more "societally acceptable," sanctioned actions that emphasize the effort over the results.
Drawbacks of a plastic straw ban: A ban is not going to save the oceans, but it will most probably do a bang-up job inconveniencing customers (particularly certain disabled customers) and creating additional issues for food-service establishments (e.g., increased shipping and storage costs, less durable products, decreased straw lifecycle, enforcement costs). I don't think a plastic straw ban nationwide would derail the restaurant business, but we do also have to consider the costs and determine whether they are outweighed by the benefits.
Conclusion: There is enough evidence that a plastic straw ban will be ineffective at stopping marine plastic pollution. The Left-leaning Vox points out that environmentalists admit that the ban is not so much about the straws as it is an initiative to point out the pervasiveness of single-use plastic in our lives, which is a tacit admission that the ban itself is ineffective. The Global Wildlife Conservation even acknowledges that forcing people to stop using straws is not effective because people generally do not like being told what to do. If a plastic straw ban is not the solution, then what is?
I agree we should have a conversation on how we, as a society, should consume less in general. Have those conversations with friends and family. Get volunteers to clean up the coastlines so less plastic enters the ocean. Nevertheless, more will need to be done. I am of the opinion the primary solution is in developing better technology, particularly that which captures land-based waste or that which can convert the plastic into reusable goods. I would argue that a Pigovian tax on plastic straws would be preferable to a ban (although not necessarily recommended). We could target fishing nets since it is the item that consists of nearly half of marine plastic pollution. In terms of geography, target the countries that are most responsible for marine plastic pollution. Making a big deal about the low-hanging fruit (i.e., the straws) distracts us from much larger pollutants. It also distracts us from policy alternatives that could actually reduce the amount of plastic pollution in the oceans and on the coastlines. There are ways to approach marine plastic pollution, but a plastic straw ban is not one.
Let's partake in a thought exercise here for a moment. Let's assume that we could get all 50 states in the U.S. to ban plastic straws right now. What would be the impact? Would it tackle the issue of marine plastic pollution like plastic straw ban proponents would like? I actually have a few reasons to be skeptical of success:
Straws as a percent of overall marine plastic pollution: First, it would be prudent to ask how many straws are in our oceans right now. Estimates put it at 4 percent of the plastic trash in oceans in terms of number of pieces. However, we have to remember that plastic straws are very light. In terms of tonnage, plastic straws make up 2,000 out of 9,000,000 tons, or 0.2 percent. Bloomberg had a similar estimation of 0.3 percent of all ocean plastic. That means if we were to stop producing plastic straws and were able to remove all plastic straws from the ocean, it would have such a minimal effect on the issue at hand. The effect of plastic straws in the ocean is metaphorically a drop in the ocean when comparing it to the total tonnage of plastic that makes it out into the oceans. So what is a major contributor to marine plastic pollution? According to one recent study, 46 percent of plastic waste in the ocean is from a single product: fishing nets (Lebreton et al., 2018).
The United States' contribution to marine plastic pollution: This goes back to the question of "how much does the United States [or the developed world] contributes to marine plastic pollution." The answer? The United States is responsible for 0.9 percent of marine plastic pollution (Jambeck et al., 2015), even though it accounts for about 5 percent of the global population. Assuming that the 0.9 percent proportionality carries over to the 0.3 of marine plastic pollution that is plastic straws, that would mean that U.S. straws are only responsible for 0.27 percent of marine plastic pollution. Even if the United States were responsible for all marine plastic pollution related to plastic straws (which it is not), then that would still only account for 0.3 percent of all marine plastic pollution. If the United States is not responsible for marine plastic pollution, who is? China is the largest culprit, at 28 percent (Jambeck et al., 2015). China, Indonesia, Philippines, Vietnam, and Sri Lanka account for nearly 60 percent of marine plastic pollution.
Will a plastic straw ban encourage better consumption habits?: Environmentalists are counting on there being a positive spillover effect to motivate people to reconsider their plastics consumption. I question the spillover effect on two fronts.
Past Plastic Bans
The first is that plastic straws are not the first plastic item that has been taxed or banned to incentivize better consumption patterns. The government creating interventionist policies for plastic bags have existed since 1994. California was the first U.S. state to do so in 2007. There have also been taxes and bans on plastic microbeads since 2014 (Xanthos and Walter, 2017). I don't automatically dismiss the possibility that a plastic straw ban could help shift consumption patterns. At the same time, the question that needs to be asked is "What would make a plastic straw ban different from past plastic product bans?"
Feel-Good Public Policy
Milton Friedman was famous for saying that "One of the great mistakes is to judge policies and programs on their intentions rather than their results." That quote decidedly applies here. The question is whether people can feel good enough about it to change their habits, but not so good where it creates a euphoria from slacktivism. As already established, removing all plastic straws from the ocean and desisting from plastic straw usage does not solve the problem of marine plastic pollution by a long shot. This is not the only time this feel-good policy would come into fruition. People who by fair trade goods think they are helping out "the little guy" in developing countries. However, an understanding of the value chain would show that it is helping out the big guy, not to mention that it does not help end the cycle of poverty in these countries. There are those who feel better when they "buy local." If you prefer it, fine, but if you think you're saving the world, you're not. There are those who eat organic only either because it's healthier or because it's saving the environment. The problem with that is neither one of those reasons can withstand scrutiny. The last thing we need is more "societally acceptable," sanctioned actions that emphasize the effort over the results.
Drawbacks of a plastic straw ban: A ban is not going to save the oceans, but it will most probably do a bang-up job inconveniencing customers (particularly certain disabled customers) and creating additional issues for food-service establishments (e.g., increased shipping and storage costs, less durable products, decreased straw lifecycle, enforcement costs). I don't think a plastic straw ban nationwide would derail the restaurant business, but we do also have to consider the costs and determine whether they are outweighed by the benefits.
Conclusion: There is enough evidence that a plastic straw ban will be ineffective at stopping marine plastic pollution. The Left-leaning Vox points out that environmentalists admit that the ban is not so much about the straws as it is an initiative to point out the pervasiveness of single-use plastic in our lives, which is a tacit admission that the ban itself is ineffective. The Global Wildlife Conservation even acknowledges that forcing people to stop using straws is not effective because people generally do not like being told what to do. If a plastic straw ban is not the solution, then what is?
I agree we should have a conversation on how we, as a society, should consume less in general. Have those conversations with friends and family. Get volunteers to clean up the coastlines so less plastic enters the ocean. Nevertheless, more will need to be done. I am of the opinion the primary solution is in developing better technology, particularly that which captures land-based waste or that which can convert the plastic into reusable goods. I would argue that a Pigovian tax on plastic straws would be preferable to a ban (although not necessarily recommended). We could target fishing nets since it is the item that consists of nearly half of marine plastic pollution. In terms of geography, target the countries that are most responsible for marine plastic pollution. Making a big deal about the low-hanging fruit (i.e., the straws) distracts us from much larger pollutants. It also distracts us from policy alternatives that could actually reduce the amount of plastic pollution in the oceans and on the coastlines. There are ways to approach marine plastic pollution, but a plastic straw ban is not one.
Monday, July 9, 2018
What Is to Become of Roe v. Wade Post-Kennedy?
Within the past week or so, I have seen articles, analyses, and Facebook postings about Justice Anthony Kennedy's retirement. Many view Justice Kennedy's place on the Supreme Court (SCOTUS) as a way to keep the balance between conservative and liberal elements on the Court. It is widely assumed that President Trump is going to nominate someone more conservative than Justice Kennedy. Political pundits have been pontificating on what Kennedy's retirement means for a number of hot-button issues. One issue caught my eye: Roe v. Wade, the SCOTUS case that established the precedent of a right to an abortion per the Fourteenth Amendment. Normally, I don't like performing such speculation. It's not because I am incapable of making an educated guess because that is well within my capacity. I typically do not like it because, not to be too tautological, speculation is speculative. Educated guesswork is still guesswork. Nevertheless, I have heard so much clamor lately on the issue that I thought I would weigh in with the available time I have.
Before I begin, I want to say this: today's blog entry is not about whether making abortion illegal would be "good public policy." It is also not a normative discussion of whether abortion is morally or personally acceptable. I'm not looking to hash out the abortion debate here. Today, I will cover something more narrow: what will be the likely fate of this hot-button issue now that Justice Kennedy is retiring?
Although I am posting this on Monday, July 9, I am writing this on Sunday, July 8. As of July 8, President Trump had the short list narrowed to three contenders: Amy Coney Barrett, Brett Kavanaugh, and Raymond Kethledge. Looking at these contenders' records, it is likely that they will be at least as conservative, if not more so, than Justice Kennedy. Even without knowing which individual that President Trump will ultimately select, there is also the assumption that the nominee will make it past the Senate for confirmation.
General Considerations
I think there are three general reasons I am skeptical of downright reversal of Roe v. Wade. I call these "general reasons" because they can also be applied to the speculation of the fate of LGBT rights and affirmative action, as well as any other issues that could potentially be affected by Kennedy's retirement. One is that I am skeptical that the other four conservative-leaning Justices would reverse precedent that has been set. This leads into the second reason, which is that the Court has numerically had a majority of the Justices be Republican-appointed in SCOTUS for the better part of the past four-plus decades. There has been plenty of time to reverse Roe v. Wade, as well as other major Warren-era cases (e.g., Miranda, Brown) and SCOTUS has not done so. The third bit of skepticism is the assumption that the next Justice will be an activist justice with a conservative bent. Justices David Souter and Anthony Kennedy were supposed to be more conservative than they turned out to be. The past is not an indication of the future, I know, but the fact that such a precedence exists should give us at least some pause and not give into worst-case scenario thinking. That being said, let's take a look at the more issue-specific details.
Considerations Specific to Roe v. Wade
The main question being asked is whether Roe v. Wade will be overturned outright. Even assuming that SCOTUS were presented with a case that would challenge Roe v. Wade, it begs the question of what the scope of overturning Roe v. Wade would be. In the most overreaching outcome, SCOTUS could rule that the fetus is a human being with de jure constitutional rights, which would mean a de facto ban on abortion. Although possible, I do not think SCOTUS would hand out that sort of judicial fiat. Given that the Right tends to be about states rights, I would assume that the more likely outcome of overturning Roe v. Wade would be SCOTUS leaving it up to the individual states. According to the Guttmacher Institute, which is Planned Parenthood's research arm, four states have automatic bans in place in the event of Roe v. Wade being overturned; ten states have non-enforceable bans; and seven states have expressed interest in limiting abortion further upon being overturned. Since there is some overlap, the Guttmacher Institute has identified up to 17 states that could severely limit or eliminate abortion upon the reversal of Roe v. Wade. The Center for Reproductive Rights predicts that 23 states would be at "High Risk" if Roe v. Wade were overturned.
I don't rule out Roe v. Wade being overturned. At the same time, I do not consider it an inevitability because it is not the only plausible outcome. The Left-leaning Vox brought in a good analysis from ten legal experts on what is going to happen with abortion in the United States. After reading it, I think that it is more likely that Roe v. Wade will be chipped away at gradually and incrementally. As the Vox brings up in a different article, the pro-life movement has essentially taken that approach for a few years now. Since 2010, there have been 400 laws passed on the state level restricting abortion access to some capacity. Recent polling from the Kaiser Foundation also found that about two-thirds of Americans support Roe v. Wade (although on the other hand, Gallup polling from last month shows that only 28 percent of Americans support abortion in the second trimester or later). As such, I think the more probable outcome is that the pro-life movement will continue with its already-proven strategy of whittling away at Roe v. Wade instead of attacking it outright.
Postscript
I am not 100 percent certain of what the fate of Roe v. Wade will be: only time will tell. There are multiple ways that abortion laws in the United States could play out, but I think it is safe to say that Roe v. Wade is at higher risk than it has ever been. Regardless of where you sit on the abortion debate, keep your eye on what happens on the state level because that will have just as big, if not a bigger role in how abortion access in the United States plays out. Stay tuned.
Before I begin, I want to say this: today's blog entry is not about whether making abortion illegal would be "good public policy." It is also not a normative discussion of whether abortion is morally or personally acceptable. I'm not looking to hash out the abortion debate here. Today, I will cover something more narrow: what will be the likely fate of this hot-button issue now that Justice Kennedy is retiring?
Although I am posting this on Monday, July 9, I am writing this on Sunday, July 8. As of July 8, President Trump had the short list narrowed to three contenders: Amy Coney Barrett, Brett Kavanaugh, and Raymond Kethledge. Looking at these contenders' records, it is likely that they will be at least as conservative, if not more so, than Justice Kennedy. Even without knowing which individual that President Trump will ultimately select, there is also the assumption that the nominee will make it past the Senate for confirmation.
General Considerations
I think there are three general reasons I am skeptical of downright reversal of Roe v. Wade. I call these "general reasons" because they can also be applied to the speculation of the fate of LGBT rights and affirmative action, as well as any other issues that could potentially be affected by Kennedy's retirement. One is that I am skeptical that the other four conservative-leaning Justices would reverse precedent that has been set. This leads into the second reason, which is that the Court has numerically had a majority of the Justices be Republican-appointed in SCOTUS for the better part of the past four-plus decades. There has been plenty of time to reverse Roe v. Wade, as well as other major Warren-era cases (e.g., Miranda, Brown) and SCOTUS has not done so. The third bit of skepticism is the assumption that the next Justice will be an activist justice with a conservative bent. Justices David Souter and Anthony Kennedy were supposed to be more conservative than they turned out to be. The past is not an indication of the future, I know, but the fact that such a precedence exists should give us at least some pause and not give into worst-case scenario thinking. That being said, let's take a look at the more issue-specific details.
Considerations Specific to Roe v. Wade
The main question being asked is whether Roe v. Wade will be overturned outright. Even assuming that SCOTUS were presented with a case that would challenge Roe v. Wade, it begs the question of what the scope of overturning Roe v. Wade would be. In the most overreaching outcome, SCOTUS could rule that the fetus is a human being with de jure constitutional rights, which would mean a de facto ban on abortion. Although possible, I do not think SCOTUS would hand out that sort of judicial fiat. Given that the Right tends to be about states rights, I would assume that the more likely outcome of overturning Roe v. Wade would be SCOTUS leaving it up to the individual states. According to the Guttmacher Institute, which is Planned Parenthood's research arm, four states have automatic bans in place in the event of Roe v. Wade being overturned; ten states have non-enforceable bans; and seven states have expressed interest in limiting abortion further upon being overturned. Since there is some overlap, the Guttmacher Institute has identified up to 17 states that could severely limit or eliminate abortion upon the reversal of Roe v. Wade. The Center for Reproductive Rights predicts that 23 states would be at "High Risk" if Roe v. Wade were overturned.
I don't rule out Roe v. Wade being overturned. At the same time, I do not consider it an inevitability because it is not the only plausible outcome. The Left-leaning Vox brought in a good analysis from ten legal experts on what is going to happen with abortion in the United States. After reading it, I think that it is more likely that Roe v. Wade will be chipped away at gradually and incrementally. As the Vox brings up in a different article, the pro-life movement has essentially taken that approach for a few years now. Since 2010, there have been 400 laws passed on the state level restricting abortion access to some capacity. Recent polling from the Kaiser Foundation also found that about two-thirds of Americans support Roe v. Wade (although on the other hand, Gallup polling from last month shows that only 28 percent of Americans support abortion in the second trimester or later). As such, I think the more probable outcome is that the pro-life movement will continue with its already-proven strategy of whittling away at Roe v. Wade instead of attacking it outright.
Postscript
I am not 100 percent certain of what the fate of Roe v. Wade will be: only time will tell. There are multiple ways that abortion laws in the United States could play out, but I think it is safe to say that Roe v. Wade is at higher risk than it has ever been. Regardless of where you sit on the abortion debate, keep your eye on what happens on the state level because that will have just as big, if not a bigger role in how abortion access in the United States plays out. Stay tuned.
Wednesday, July 4, 2018
Janus v. AFSCME: The Policy Implications of Removing Mandatory Agency Fees
Last week was a crazy week for the Supreme Court (SCOTUS), the most notable being that of Justice Kennedy's retirement. However, there was another significant event at the Court: Janus v. American Federation of State, County, and Municipal Employees (AFSCME). The Janus case is important because it asked whether it is constitutional to require public employees to pay an "agency fee" to a union that they refuse to join.
In 2016, I wrote about compulsory union dues when SCOTUS was presented with the case of Friedrichs v. California Teachers Association. The Friedrichs case that was very similar to the Janus case, which is why many of the arguments I used two years ago will be used here today. Getting back on track, Justice Scalia had just passed away in early 2016. Because there were only eight Justices, there was an equally-divided Court that favored the lower court's ruling, and ruled that the Friedrichs case did not set precedent. This is why Janus is important: because it ruled that an agency fee for public-sector employees is a violation of the First Amendment. The Janus case is a rare example of SCOTUS setting aside stare decisis and overturning precedent being set, in this case, that of Abood v. Detroit Board of Education (1977).
I do have some more philosophical qualms with allowing agency fees, and not just with that of freedom of association and forcing people to join something as hyper-politicized as a union (e.g., only 41 percent of teachers are Democrats, although 94 percent of teacher union campaign contributions go to Democrats). The problem with the Abood case is that it drew this arbitrary line between the public-sector unions' collective bargaining and political action. For public sector unions, collective bargaining is inherently a political activity because increased wages and benefits have a direct impact on public policy. I also have an issue with the idea of compulsory agency fees. If a union does a good job representing its members, why the need for compulsory membership? Wouldn't potential members simply see the value of union membership and join?
I would like to keep the focus of this analysis on the public policy implications of the Janus ruling. Some are already calling the Janus case a death blow to the labor movement. Nat Malkus, the Deputy Director of Education Policy at the American Enterprise Institute, released a data analysis (also see here) on what happened when three states (Indiana, Michigan, and Wisconsin) removed agency fees, and what it meant for unionism. There is no doubt that the removal of agency fees will curtail the influence of unions, especially that of teachers unions. The union-backed Illinois Economic Policy Institute (ILEPI) estimates that there will be a nationwide decline in union membership of eight percent with SCOTUS ruling in favor of Janus (Manzo and Bruno, 2018).
The ILEPI study also predicted an annual decline in economic activity of $11.7B to $33.4B. I have my skepticism about such a finding, least of which I have found right-to-work laws a preferable option to compulsory unionism (read the Freedom Foundation amicus brief and research from the Heritage Foundation for more information). The truth is that unions have a monopoly power, a power to raise wages and benefits above fair market value. As a result of the law of demand, less people can be hired by the given employer. The tradeoff of higher wages for union employees is more inefficient allocation of resources (Anzia and Moe, 2013), as well as less profit and fewer jobs (Holcombe and Gwartney, 2010). The libertarian Competitive Enterprise Institute also found that collective bargaining has created a deadweight loss of 10 to 12 percentage points in the GDP over the past century (Gallaway and Robe, 2014).
Collective bargaining for teachers has also shown to have a negative effect on students. A paper from Cornell University found that collective bargaining reduced students' earnings by an average of $800 a year, which amounts to reduced earnings of $199.6 billion annually (Lovenheim and Willen, 2018). There is also evidence suggesting that state teacher union strength has a negative impact on student test scores (Lott and Kenny, 2013; Moe, 2008).
Another issue is the nature of public-sector unions is different from that of private-sector unions. In a private-sector union, there are a limited amount of funds that a business can use to improve wages and benefits for private-sector workers. Contrast that to the public sector, which is not a problem because the union is sitting on both sides of the table (i.e., the union and the politicians they have [in probability] gotten into office). A public-sector union is incentivized to advocate for increased taxes, which is why President Franklin D. Roosevelt realized how public-sector unions pit taxpayers against public-sector employees, at least in part because unions are not bargaining with the taxpayers.
The public-sector union relationship has created increasingly lavish wages and benefits, which has contributed to another problem: unfunded pension liabilities. The Pew Charitable Trusts released a report this past April on the state pension funding gap. It found that there are only four states that have at least 90 percent of the assets to fund promised benefits: New York, South Dakota, Tennessee, and Wisconsin. The fifty states cumulatively have a funding gap of $1.4 trillion as of 2016. The collective bargaining for higher-than-competitive-market wages and benefits has greatly contributed to this looming problem that will end up being the single greatest state-level budgetary issue for the vast majority of states (e.g., Novy-Marx and Rauh, 2012).
Where do we, the people, go from here? One potential workaround is to have the money come directly from the state or local Treasury. However, that might not be politically feasible because of the optics of more collusion between unions and government. If not, then there very well could be thousands who leave the public-sector unions. Less money means less capability, which very well mean teachers unions have to reach across the aisle to get things done. The major implication of Janus is that public-sector unions will have to prioritize its operations. If it wants to retain or increase membership, it will mean having to provide a value proposition instead of coercing agency fees. The paradox here is within 2018 survey findings from the Educators for Excellence. Most teachers find unions to be important, but most teachers also find that unions do not adequately represent members.
Let's also remember that exclusive representation is not inherent in unionism, but rather a result of state laws mandating it. Unions in Europe rely less on exclusive bargaining representation and more on collective social representation, which seems to work better (as well as diminish the free-rider argument of Abood). Regardless of exact approach, one thing is crystal clear: if public-sector unions want to survive post-Janus, they will need to learn how to adapt to the twenty-first century.
In 2016, I wrote about compulsory union dues when SCOTUS was presented with the case of Friedrichs v. California Teachers Association. The Friedrichs case that was very similar to the Janus case, which is why many of the arguments I used two years ago will be used here today. Getting back on track, Justice Scalia had just passed away in early 2016. Because there were only eight Justices, there was an equally-divided Court that favored the lower court's ruling, and ruled that the Friedrichs case did not set precedent. This is why Janus is important: because it ruled that an agency fee for public-sector employees is a violation of the First Amendment. The Janus case is a rare example of SCOTUS setting aside stare decisis and overturning precedent being set, in this case, that of Abood v. Detroit Board of Education (1977).
I do have some more philosophical qualms with allowing agency fees, and not just with that of freedom of association and forcing people to join something as hyper-politicized as a union (e.g., only 41 percent of teachers are Democrats, although 94 percent of teacher union campaign contributions go to Democrats). The problem with the Abood case is that it drew this arbitrary line between the public-sector unions' collective bargaining and political action. For public sector unions, collective bargaining is inherently a political activity because increased wages and benefits have a direct impact on public policy. I also have an issue with the idea of compulsory agency fees. If a union does a good job representing its members, why the need for compulsory membership? Wouldn't potential members simply see the value of union membership and join?
I would like to keep the focus of this analysis on the public policy implications of the Janus ruling. Some are already calling the Janus case a death blow to the labor movement. Nat Malkus, the Deputy Director of Education Policy at the American Enterprise Institute, released a data analysis (also see here) on what happened when three states (Indiana, Michigan, and Wisconsin) removed agency fees, and what it meant for unionism. There is no doubt that the removal of agency fees will curtail the influence of unions, especially that of teachers unions. The union-backed Illinois Economic Policy Institute (ILEPI) estimates that there will be a nationwide decline in union membership of eight percent with SCOTUS ruling in favor of Janus (Manzo and Bruno, 2018).
The ILEPI study also predicted an annual decline in economic activity of $11.7B to $33.4B. I have my skepticism about such a finding, least of which I have found right-to-work laws a preferable option to compulsory unionism (read the Freedom Foundation amicus brief and research from the Heritage Foundation for more information). The truth is that unions have a monopoly power, a power to raise wages and benefits above fair market value. As a result of the law of demand, less people can be hired by the given employer. The tradeoff of higher wages for union employees is more inefficient allocation of resources (Anzia and Moe, 2013), as well as less profit and fewer jobs (Holcombe and Gwartney, 2010). The libertarian Competitive Enterprise Institute also found that collective bargaining has created a deadweight loss of 10 to 12 percentage points in the GDP over the past century (Gallaway and Robe, 2014).
Collective bargaining for teachers has also shown to have a negative effect on students. A paper from Cornell University found that collective bargaining reduced students' earnings by an average of $800 a year, which amounts to reduced earnings of $199.6 billion annually (Lovenheim and Willen, 2018). There is also evidence suggesting that state teacher union strength has a negative impact on student test scores (Lott and Kenny, 2013; Moe, 2008).
Another issue is the nature of public-sector unions is different from that of private-sector unions. In a private-sector union, there are a limited amount of funds that a business can use to improve wages and benefits for private-sector workers. Contrast that to the public sector, which is not a problem because the union is sitting on both sides of the table (i.e., the union and the politicians they have [in probability] gotten into office). A public-sector union is incentivized to advocate for increased taxes, which is why President Franklin D. Roosevelt realized how public-sector unions pit taxpayers against public-sector employees, at least in part because unions are not bargaining with the taxpayers.
The public-sector union relationship has created increasingly lavish wages and benefits, which has contributed to another problem: unfunded pension liabilities. The Pew Charitable Trusts released a report this past April on the state pension funding gap. It found that there are only four states that have at least 90 percent of the assets to fund promised benefits: New York, South Dakota, Tennessee, and Wisconsin. The fifty states cumulatively have a funding gap of $1.4 trillion as of 2016. The collective bargaining for higher-than-competitive-market wages and benefits has greatly contributed to this looming problem that will end up being the single greatest state-level budgetary issue for the vast majority of states (e.g., Novy-Marx and Rauh, 2012).
Where do we, the people, go from here? One potential workaround is to have the money come directly from the state or local Treasury. However, that might not be politically feasible because of the optics of more collusion between unions and government. If not, then there very well could be thousands who leave the public-sector unions. Less money means less capability, which very well mean teachers unions have to reach across the aisle to get things done. The major implication of Janus is that public-sector unions will have to prioritize its operations. If it wants to retain or increase membership, it will mean having to provide a value proposition instead of coercing agency fees. The paradox here is within 2018 survey findings from the Educators for Excellence. Most teachers find unions to be important, but most teachers also find that unions do not adequately represent members.
Let's also remember that exclusive representation is not inherent in unionism, but rather a result of state laws mandating it. Unions in Europe rely less on exclusive bargaining representation and more on collective social representation, which seems to work better (as well as diminish the free-rider argument of Abood). Regardless of exact approach, one thing is crystal clear: if public-sector unions want to survive post-Janus, they will need to learn how to adapt to the twenty-first century.
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