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Reconsidering Kinship Care - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Mon, 07/09/2018 - 22:08

The decades-long debate over kinship care in America seems to have been settled. The once-prevalent belief that only the most caring, stable families should be prioritized as placement options for foster children has been replaced with the assumption that relatives of foster children should always be looked to for assistance first.

This might appear sensible; for most of human history, the preference for keeping children with extended family need hardly have been articulated. Yet in many cases, the results of placing children with their kin have been mixed at best. Often, such placements exacerbate the problems that foster-care policies are meant to correct.

To better answer the question of whether prioritizing kinship care is preferable to other methods of determining foster-care placements, it will be useful to assess how we got here, to grasp the role that racial considerations have played in the rise of kinship care, and to appreciate the costs as well as the benefits involved. In some important respects, the turn to kinship care is a return to prior norms, but with some consequential differences.

To read the full article, click here.

Backfire economics – Trump’s tariffs are hurting US farmers and workers and putting the entire economy at risk - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Mon, 07/09/2018 - 19:47

New reports are surfacing almost daily now of how Trump’s tariffs are backfiring and hurting US workers and farmers and putting the entire US economy at risk. Here’s a sample of six media reports from the last few days that featured today in my ongoing CD series titled “Backfire Economics.”

1. How Trump’s Policy Decisions Undermine the Industries He Pledged to Help (New York Times):

Even as the president’s pro-business stance is broadly embraced by the corporate community, in some significant cases the very industries that Mr. Trump has vowed to help say that his proposals will actually hurt them. They also warn that policies designed to aid one group will eat into someone else’s business in ways that policymakers should have anticipated.

“I would like to tell the president, ‘Man, you are messing up our market,’” said Kevin Scott, a soybean farmer in South Dakota and the secretary of the American Soybean Association. The idea of changing Nafta, he said, “gives us a lot of heartburn in farm country.”

At the same time, Mr. Scott said, China’s threat to impose tariffs this week on United States soybeans — in direct response to Mr. Trump’s tariffs on other Chinese-made products — is already having a negative effect on the prices farmers see. In recent days, Canada imposed its own retaliatory tariffs against the United States. And on Friday, General Motors warned that Mr. Trump’s threat of tariffs on imported cars could backfire, killing American jobs and leading to “a smaller G.M.”

2. U.S. Exporters Will Be a Surprise Loser From Tariff Fight (Wall Street Journal):

Though completely counter-intuitive, theory and evidence show that taxes on imports act just like a tax on exports. Though it’s early, the Trump administration’s recent round of tariffs is already rippling out to exporters: Soybean farmers face plunging prices as China raises tariffs, Harley-Davidson will move production of motorcycles destined for the European Union out of the U.S., and BMW says foreign retaliation may hit exports from its South Carolina plant.

Economists credit Abba Lerner, then a graduate student at the London School of Economics, for proving theoretically in 1936 that an import tariff was equivalent to a tax on exports. The Lerner Symmetry Theorem is considered a key principle of trade economics, like 18th century economist David Ricardo’s theory of comparative advantage.

3. New Chinese Tariffs Mean Lower Prices For Wisconsin Farmers (Wisconsin Public Radio):

Mark Stephenson, director of dairy policy analysis at the University of Wisconsin-Madison, said it’s reminiscent of the “guns versus butter” model in economics. Normally, the concept is used to talk about the relationship between a country’s investment in defense versus civilian goods. But Stephenson said it feels relevant on the issue of tariffs. “Right now, agriculture in particular, and dairy for us especially, is just getting the blow-back of these retaliatory tariffs on steel and aluminum,” Stephenson said.

Stephenson said the new tariffs have already caused Class III futures prices to decline by $2 per hundredweight, or 100 pounds of milk. “Going into our fourth year of relatively low milk prices and now seeing the price that had been recovering stumble, and significantly stumble, it’s not a good thing,” Stephenson said. “So producers are not feeling good about that impact of tariffs.”

4. U.S. Soybeans Are A Prime Target For Chinese Tariffs (National Public Radio).

Minnesota soybean farmer Michael Petefish and president of the Minnesota Soybean Growers Association:

Since the announcement of retaliatory tariffs, the soybean market has dropped almost $2 per bushel. For my family farm, with the amount of soybeans we produce, that’s close to $250,000 in lost value.

5. Donald Trump’s Trade War Is Proving The Free Traders Right (The Federalist):

It seems almost embarrassing to have to rehearse the case for free markets and free trade, a case thoroughly established centuries ago by the likes of Adam Smith and especially Frederic Bastiat. But Donald Trump is determined to make us learn that case all over again, the hard way.

The key argument for free trade is that a tariff on imports may benefit one particular industry or group of producers, but it raises prices for everyone else, including other manufacturers who import the taxed material. You think the country is getting ahead because you see the increased profits for, say, domestic steel producers. The problem, as Bastiat famously pointed out, is what you don’t see—or at least, what Trump refuses to see—namely, all of the costs that tariffs impose on other companies and individuals.

…..

Part of the reason President Trump’s unilateral trade war is becoming such a quagmire is that it is carried out with no apparent plan or strategy. It is not a negotiating ploy to push other countries into a trade deal with the United States, because Trump announced this war by withdrawing from trade deal negotiations. Instead, his targets seem random and capricious. As with his hairstyle and many of his other political views, Trump’s attitude toward trade and industry seems to have been cemented in 1978, so he’s laying down trade barriers around the industries that associated with American economic might back then, like steel and cars.

Yet he is finding that even the quintessential American firms of 1978 are connected to the world if vast webs of trade. Take one of the brands Trump has lauded, Harley-Davidson. These days, Harley sells a lot of motorcycles in Europe, so Trump’s trade war is causing them to move some production overseas to avoid European retaliatory tariffs. Rather than rethink the tariffs, Trump threatened the company and accused it of “surrender” in his trade war.

6. Trump Voters Stand by Their Man as He Wrecks Their Jobs (Reason):

All of which leaves the impression that support for Trump’s tariffs is not something generated by a sense of a greater good. It’s not about voters agreeing to take a hit now because they understand it is necessary for something beneficial down the road. It seems to be, mostly, about tribalism. About the fact that our guy is “better than the Muslim we had in the White House,” even if his policies cost my job.

At least that’s how it seems for now. Once more jobs are actually lost, and perhaps once it becomes clear that the tariffs aren’t accomplishing whatever goals Trump has, perhaps that will change. The partisan hatred might not go away, but maybe voters will stay home. Until then, parts of so-called Trump country seem to be fine with their man destroying their jobs to own the libs.

More trust funds, more problems - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Mon, 07/09/2018 - 19:45

In a new AEI Economic Perspectives paper, my esteemed colleague Joe Antos and Bob Mofitt of Heritage explain what the 2018 annual report of the Medicare Board of Trustees teaches us about the future of the program. Much of the media coverage has focused on the dire state of Medicare’s Hospital Insurance (HI) trust fund, which pays for Medicare Part A and is projected to run out of cash by 2026. While this sounds bad, it both over- and understates the size of the problem.

It overstates it because revenue would continue to come in to the trust fund and payments would not automatically drop to zero; in addition, money is fungible and Congress would presumably keep Part A payments from falling precipitously. More importantly, it understates the size of the problem drastically. While the Supplementary Medical Insurance (SMI) trust fund, which pays for Part B and D, will not literally run out of cash like the HI fund, that is only because sizable amounts of general revenue are automatically pumped into the fund. Less concerning from an accounting perspective, perhaps, but if anything more worrisome for the federal budget outlook.

Read the whole paper here to learn what can and should (but probably will not) be done.

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With unemployment this low, why is wage growth so tepid? - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Mon, 07/09/2018 - 17:54

Originally posted on National Review’s The Corner.

It’s been a while since we’ve had such low unemployment. pic.twitter.com/DcFEQPSdJ7

— Michael R. Strain (@MichaelRStrain) July 9, 2018

The unemployment rate is very low, measured at 4 percent for the month of June. It has been nearly two decades since the US economy was characterized by so little unemployment.

Basic economics says that falling unemployment should lead to faster wage growth. With fewer and fewer workers unable to find a job, the pressure mounts on businesses to increase pay in order to attract relatively scarce workers.

The expectation of faster wage growth is bolstered by other labor-market indicators. For example, there are currently 6.7 million job openings, the greatest number on record. And workers are quitting their jobs — which may be a sign they are confident they will get a better job — at a high rate.

And wages are growing. But not as fast as many expect.

Wage growth is slower than in the previous expansion. pic.twitter.com/xxZQnqkQNd

— Michael R. Strain (@MichaelRStrain) July 4, 2018

So why the slow wage growth? In my latest Bloomberg column, I discuss some candidate explanations: There is “hidden slack” in the labor market, because many people were driven out of the workforce by the severity of the Great Recession. The composition of the workforce is changing in ways that affect measured, economy-wide pay. Businesses are using levers other than wages to attract workers. Many of us are in for pay cuts that we should have received during the Great Recession, but didn’t due to employers’ reluctance to reduce nominal pay. And maybe you’re reluctant to go to the boss and ask for a raise?

Check out the column here. Your comments, as always, are very welcome.

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Constitutional government in an age of tribalism and identity politics: A conversation with House Speaker Paul Ryan (R-WI) and Jonah Goldberg - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Mon, 07/09/2018 - 17:48

In a time of populist and tribalist upheaval, how can supporters of constitutional principles and mediating institutions defend them against modern challenges? House Speaker Paul Ryan (R-WI) joins AEI Asness Chair in Applied Liberty Jonah Goldberg for a constructive conversation on what those who wish to defend these principles and institutions should do.

 Join the conversation on social media with @AEI on Twitter and Facebook.

 If you are unable to attend, we welcome you to watch the event live on this page. Full video will be posted within 24 hours.

China’s currency depreciation should set off alarm bells - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Mon, 07/09/2018 - 15:08

The recent sharp Chinese currency depreciation should be setting off alarm bells for the global economy.

Not only does that movement likely presage further currency depreciation in China, the world’s second-largest economy, but it also increases the likelihood that China and the United States might be drifting inexorably toward both a currency and a trade war.

President Donald Trump takes part in a welcoming ceremony with China’s President Xi Jinping at the Great Hall of the People in Beijing, China, November 9, 2017. Reuters

Since March, the Chinese currency has depreciated by some 6 percent, taking it to the sensitive level of 6.7 renminbi to the dollar. It has done so in the context of a weakening Chinese economy, a generalized strengthening of the U.S. dollar and the implementation of an “America First” trade policy.

There are at least two reasons to think that the Chinese will be forced to continue allowing their currency to depreciate against the U.S. dollar. The first is that they will need to use currency depreciation as the means to provide some support to the Chinese economy by incentivizing its export sector.

This is especially the case at a time when domestic policy efforts are being made to rein in China’s massive credit and housing market bubbles and as the Chinese economy gets hit by an increase in U.S. import tariffs.

As China’s credit and housing market bubbles burst, the Chinese economy must be expected to weaken markedly. This would seem to be particularly the case considering that the Chinese credit bubble over the past eight years has been far larger than that which the United States experienced in the run up to its 2007–2008 housing bust.

In those circumstances, the last thing that the Chinese economy needs is to be hit by yet another shock in the form of increased U.S. trade protection.

A second reason to think that the Chinese authorities will allow their currency to depreciate against the dollar is that if they did not do so, their currency would appreciate along with the U.S. dollar against the currencies of all of its other trade partners.

This is especially the case at a time that the expansive budget policy of the Trump administration at this late stage in the U.S. economic cycle is putting strong upward pressure on both U.S. interest rates and on the U.S. dollar.

The reason to fear that additional Chinese currency depreciation will lead China and the U.S. further down the road to a full-blown currency and trade war is that China and the U.S. will have different views as to future Chinese currency depreciation.

For their part, the Chinese authorities are likely to view currency depreciation as a perfectly justifiable policy move for them to allow considering the prospective marked weakening of the Chinese economy.

After all, they might argue that this is precisely what the world’s major countries have been doing since the 2008–2009 Great Recession when their respective economies weakened.

At various intervals over the past decade, the Federal Reserve, the Bank of Japan, the European Central Bank and the Bank of England have all responded to weakening in their economies by massive money printing that has had the effect of causing their respective currencies to depreciate.

The Chinese authorities might very well ask why they should be prevented from allowing their currency to depreciate now that its economy is weakening when this has been the accepted practice for the advanced industrialized countries.

For its part, the Trump administration is likely to view Chinese currency depreciation as yet another means by which China is gaming the international trading system.

Far from viewing currency depreciation as a means to support a weakening economy, the Trump administration will view such depreciation as a Chinese return to its old ways of unfairly manipulating its currency for competitive advantage and for generating trade surpluses at the United States’ expense.

Sadly, all of this holds out the prospect for an intensification of a U.S. currency and trade war. With both sides likely to feel strongly justified in their divergent views on China’s currency depreciation, it also does not bode well for an early resolution of trade tensions between China and the U.S.

Needless to add, any intensification in U.S.-Chinese currency and trade frictions could cast a dark cloud over the global economy. As Napoleon might have put it, when the world’s two largest economies engage in a currency and trade war, the rest of the world economy will shudder.

Trump UK visit: Will the special relationship last? | In 60 Seconds - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Mon, 07/09/2018 - 15:06


As President Trump prepares to visit the UK, AEI’s Dalibor Rohac wonders what’s so special about the “special relationship.”

The economics and emotions behind slow wage growth - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Mon, 07/09/2018 - 14:18
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The labor market appears to be quite strong, judging by June’s unemployment figures. The rate ticked up in June to 4 percent, but that is still very low. It has been nearly two decades since the U.S. economy has had such little unemployment.

There are currently 6.7 million job openings — a record high. And the rate at which workers are quitting their jobs is higher than it was before the onset of the Great Recession. But wage growth is still noticeably slower than many economists and analysts expect (despite all the stories about employers desperate for workers).

So why does wage growth continue to be so tepid?

Read More

As unemployment falls and the number of open jobs increases, businesses should have to increase pay in order to attract increasingly scarce available workers as well as retain the employees they have. And if workers are quitting voluntarily, it stands to reason that many of them are not only confident that they can get another job, but that it will be better and higher-paying as well.

The 2018 Medicare Trustees Report: Fiscal and Policy Challenges - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Mon, 07/09/2018 - 14:15

Abstract

Medicare’s financial outlook has deteriorated in the past year, according to the latest annual report by the program’s trustees. The Medicare Hospital Insurance trust fund is projected to be depleted in 2026, three years earlier than estimated in last year’s report. That understates the policy challenge. Every year, the program relies more on general revenues to cover its costs. In total, Medicare will receive $324 billion in general revenues this year. That will more than double by 2026. Prompt action is needed to put Medicare on a sound financial footing.

The 2018 Medicare Trustees Report: Fiscal and Policy Challenges

How we enabled the Chinese opioid supply chain - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Mon, 07/09/2018 - 14:06

From the beginning of this century it’s been obvious that the mislabeling of products in the middle of the pharmaco-chemical drug chain would pose a threat to end users of myriad medicines. As I described in my book “Phake” (2012), the vast majority of audits of Chinese chemical plants done by western firms were done as an afterthought (often to comply with EU and US regulations).

Furthermore, often the original source of a chemical was not actually known. The risk of buying an inferior medicine rose as a result, because without the correct provenance one cannot be sure what one is buying. One problem I encountered in cholesterol-lowering statins were impurities which can arise in batches that buyers would never even think of testing for. The result is clinical under performance and increased risk of heart problems.

Physicians work in the pharmacy of Nanyang Technological University’s traditional Chinese medicine clinic in Singapore August 2, 2016. REUTERS/Edgar Su AUNI

Individual firms got better at ensuring their own supply chains. Big Pharma identified lapses through its own audit processes and resolved many of them. And while the problem remains for some large western firms, especially when chemicals are in short supply and firms have to buy in the open market, the problem is acute for smaller western firms and all firms involved in final product manufacture in places like Vietnam, India, Pakistan, and more.

Back researching “Phake” I followed shipments of precursor chemicals through the Jebel Ali free trade zone of Dubai that claimed to have been manufactured in Italy but were actually from China. Two of these had the innocuous initials NPP and ANPP. I was told they were involved in the production of analgesics and I followed them no further. But as I now realize, these are intermediary chemicals in the production of fentanyl, which as everyone knows probably causes more opioid deaths than any other single product.

While security agents from the US DEA to EU equivalents started to clamp down on these intermediary sales, the inherent problems of chemical industry mislabeling and hence obfuscation of sources mean that problems remain, some of which exacerbate the opioid crisis.

As Guy Villax, the CEO of chemical company Hovione, told me back in 2010, millions of tons of these chemicals enter ports like Bremen in Germany and Rotterdam in Holland and a sizeable percentage of them are mislabeled. Until the chemical industry does a better job of establishing where precursor chemicals actually come from, this problem will remain.

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Hard truths about the US–Australia alliance - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Mon, 07/09/2018 - 13:14

The US–Australia alliance focuses too much on its past and too little on its future. That may seem sacrilegious, particularly amid the ongoing celebrations of 100 years of mateship. We should certainly honour the service of our men and women over the last century. But sentimentality is no replacement for level-headed rationality. If the alliance is to endure and flourish, then it’s long past time that we dealt with some hard truths.

President Donald Trump greets Australian Prime Minister Malcolm Turnbull at the conclusion of their joint news conference in the East Room of the White House in Washington, February 23, 2018. Reuters

If all were well in the US–Australia alliance, there would be little need for difficult discussions. But under the surface, differences are emerging over two issues: Donald Trump and China.

Polling shows that Australians are worried about the Trump administration’s approach to trade and alliances. The US withdrawal from the Trans-Pacific Partnership was a tough blow to Australia, which saw the trade deal as a way of ensuring continued US engagement and leadership in Asia. Also concerning are Trump’s transactional nature and his America First approach, which threaten to undermine longstanding US alliances in both Europe and Asia.

Americans, for their part, are worried that Australia and the US are diverging on China. Few in the US pay close attention to the discussion in Australia, so the comments of Bob Carr, Paul Keating, Geoff Raby, Hugh White, and others often grab Americans’ attention. There are numerous important voices in the Australian debate, but the open questioning of the US alliance leads to uncomfortable speculation about whether China’s economic weight is pulling Australia into its orbit.

So, both Americans and Australians are quietly asking tough questions about the alliance. To date, the discussions have occurred mainly behind closed doors, but it’s time to have them more directly and openly. As with any relationship, avoiding difficult discussions doesn’t make tough issues go away. Instead, problems tend to fester, creating bigger difficulties down the line.

Former US Secretary of State George Shultz famously said of the problems that arise among allies: ‘The way to keep weeds from overwhelming you is to deal with them constantly and in their early stages.’ Unfortunately, we are in need of some alliance gardening. The primary cause is a lack of attention to the alliance from leaders in the US.

Australia may be distant from the United States geographically, but that’s not why Canberra is often overlooked in Washington. Instead, superficial closeness is our problem; cultural familiarity and historical affinity have bred complacency.

One can throw a stone in Washington and find a specialist on American alliances. Experts on Japan, South Korea and NATO are abundant. But American experts on Australia are few and far between. Why? Funding limitations certainly play a part. But I suspect there’s a deeper reason: most Americans think there’s little need to study our alliance with Australia.

Unfortunately, the extended celebration of 100 years of mateship plays directly into this predisposition. We are right to honour and remember our shared struggles. But to many Americans, Australia’s enduring reliability suggests that nothing can separate us. With so many alliance challenges, some US leaders infer that the alliance with Australia is one that will endure without careful tending (or an ambassador).

How might we strengthen the US–Australia alliance and embrace a forward-looking agenda? One potential option is to establish a joint commission on the alliance. Staffed by respected experts and leaders of various political affiliations from both countries, such a commission could fortify the alliance’s foundations.

Some will say that the time isn’t right for such a commission. But one need look no further than the US–Japan alliance to understand why that’s incorrect. After the Cold War, political and economic tensions were mounting between the United States and Japan. The alliance was adrift. Yet steady leadership by respected experts (such as the Armitage–Nye reports) helped to hold the relationship together and provide the vision and agenda that ultimately renewed the alliance.

The US and Australia should embrace this lesson and establish a non-government commission on the alliance. Such an initiative would have three virtues.

First, a commission would allow for direct discussion of our differences. Track 1 or 1.5 talks make it hard to publicly address Australian concerns about the Trump administration’s approach. But ignoring the Trump factor won’t make it go away. We need Track 2 dialogues to fortify our shared long-term interests against short-term fluctuations.

Second, a commission could make the case for the alliance. Critics of the US make fair points, but it’s time to fight back against dangerous narratives on the alliance. American is not finished. And China is not faultless. The alliance’s critics have been vocal, so its supporters must unite to make a more compelling case for the enduring logic of the US–Australia alliance.

Third, a commission could identify specific next steps. We talk too much about the alliance and do too little. Deploying 2,500 marines to Darwin was to be a first step, not an unreachable goal. There’s no shortage of ideas for the alliance. So let’s set forth some difficult but important objectives and gather the focus and energy to accomplish an ambitious agenda.

We should use this commemoration to recommit ourselves to the US–Australia alliance. Not to remembering its past, but to creating its future. That is, after all, what the men and women who together served our countries would have wanted

Competition in tech (Part 1): Will the real tech companies please step forward? - Competition in tech (Part 1): Will the real tech companies please step forward?

Mon, 07/09/2018 - 10:00

Hardly a week goes by without headlines and op-eds expressing worry about the supposed power of tech companies. Martin Giles of the MIT Technology Review called Facebook, Amazon, and Google “data barons” and suggested that the government should rein them in. Michigan State University’s Adam Candeub worried in The Wall Street Journal that tech’s “cash-rich internet moguls” are expanding too fast and advised that the Federal Trade Commission should better scrutinize mergers.

Via REUTERS

Such calls for more aggressive government oversight are often based on a number of logical fallacies and cognitive biases, such as the name calling shown above. Another error that seems to occur over and over is lumping dissimilar companies together. This facilitates more logical fallacies than I care to try to name, but the association fallacy (using an irrelevant association) and reductionism (oversimplifying) come to mind.

How can we think clearly about rivalry in the tech industry? This requires answering three questions: Who really is in the tech space? Where do these companies experience competitive pressure? What is the nature of rivalry in digital markets? I address the first two questions in this blog, and a following blog will address the third question.

Is there such a thing as a tech industry?

Yes, but not in a traditional sense. Tech Nation defines a tech business as one “that provides a digital technical service/product/platform/hardware, or heavily relies on it, as its primary revenue source,” but admits that people are pretty loose with the definition. For example, Inc. magazine describes a salad restaurant chain, Sweetgreen, that considers itself a tech company because it uses an algorithm to make ordering more efficient.

To illustrate the muddle, consider how the US government classifies five companies that are often identified as characterizing the tech industry: Alphabet (Google’s parent company), Amazon, Apple, Facebook, and Microsoft.

Since 1937, the government has used Standard Industrial Classification (SIC) codes to classify industries. Factiva provides the relevant codes. Based on them, the five companies don’t appear to be related. Alphabet and Facebook are in a Services category (7375: Information Retrieval Services). Amazon is in Retail Trade (5963: Direct Selling Establishments). Apple is in Manufacturing (3663: Radio and Television Broadcasting and Communication Equipment). And Microsoft is in Services (7372: Prepackaged Software).

See also:

Are these classifications useful? Apparently not. According to economists Lasse Lien and Peter Klein, SIC codes are poor instruments for understanding how companies relate. Lien and Klein appear to be correct. According to SICCODE.com, Alphabet and Facebook are in the same SIC code as NTT Data and The New York Times. Webster Online shows Amazon is in the same SIC code as Capital Newspapers and Amway.

If industry classifications aren’t helpful, maybe it would be useful to see how companies experience competitive pressure.

Who competes with whom?

Marketline provides a list of key competitors for each of the five companies. Figure 1 summarizes Marketline’s view.

Figure 1. Competitive pressure map for Alphabet, Amazon, Apple, Facebook, and Microsoft. (Sources: Marketline and author)

Figure 1 shows the five companies of interest in bold text. The arrows show the directions of competitive pressure. For example, the one-directional arrow from Amazon to Microsoft shows that Amazon provides competitive pressure to Microsoft. The two-way arrow between Facebook and Alphabet shows that they provide competitive pressure to each other. The arrows emanating from companies in plain text, such as RED HAT and IBM, show to which of the five companies these other companies provide pressure. I omit any competitive pressures going to the companies in plain text.

Based on counts of the connections to each of the other four companies of interest, Microsoft is the most intertwined. Alphabet is the next most intertwined with three connections. Measured in terms of the number of arrows pointing at them, Microsoft and Alphabet have the most competitive pressure (three each) from others in the group of five.

Amazon is clearly different from the other five. It has no major competitive pressure from the other four according to Marketline. Also, eBay is the only tech-like company that provides competitive pressure to Amazon. Almost all of Amazon’s pressure comes from traditional retailers, such as Target and Walmart.

And the competitive pressures are asymmetric. Half of the six arrows that connect pairs of five companies of interest go only one direction. Amazon provides pressure to Alphabet and Microsoft but gets little back. And Microsoft provides pressure to Alphabet but gets little back.

How should this rivalry be understood?

I will focus on this issue in my next blog. For now, suffice it to say that the rivalry is non-traditional and understanding it requires a rethinking of our notions of market competition.

(Disclosure statement: Mark Jamison provided consulting for Google in 2012 regarding whether Google should be considered a public utility.)

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Pushing back on Iran: A different approach - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Fri, 07/06/2018 - 15:27

It’s not surprising that a great many people would like to push back on Iran, including the Trump Administration.  Over the past decade, Iran has made tremendous gains across the Middle East by taking advantage of America’s disengagement and the instability of the Arab state system.  As a result, Iran today dominates the northern tier of the Arab world and plays a damaging role in Yemen, Bahrain, Afghanistan, and the Persian Gulf.

Iran’s President Hassan Rouhani delivers remarks at a news conference during the United Nations General Assembly in New York City, U.S. September 20, 2017. REUTERS/Stephanie Keith – RC1D88E5F060

The hard part is figuring how to do so, especially given that the American people are unlikely to want to pony up massive resources for such an effort and the United States is vulnerable to an Iranian counterattack in a variety of places.

The Trump Administration has fully embraced the idea of pushing back on Iran, but it has focused almost exclusively on economic sanctions as the means of pushing back, and primarily on Iran’s nuclear program as the goal.  The problem with this approach is that Iran’s nuclear program is largely an enabler of the primary threat, which is Iran’s aggressive expansion into and destabilization of the Middle East.  The United States could remove the Iranian nuclear program from the Middle Eastern chessboard altogether and it would not eliminate the threat of Iran’s regional behavior or even slow it down, as we have seen since the passage of the JCPOA, which did effectively, that.  Sanctions on Iran could do tremendous damage to the already fragile Iranian economy, but even if those sanctions are largely respected by the rest of the international community, it is just not clear that Tehran’s hardliners will give in, or be overthrown.  Finally, pursuing a strategy in a way that the rest of the world finds odious, makes it far harder to get international support for halting or reversing Iran’s steady march across the Middle East.

In a new video and a set of six accompanying essays, I have tried to lay out an alternative approach to pushing back on Iran.  My approach would de-emphasize the nuclear deal, in fact, I would like to see the U.S. rejoin the JCPOA and work toward a follow-on agreement.  Instead, I focus on directly confronting Iran’s regional challenges.  In particular, I think the United States has the opportunity to overstrain Iran economically and militarily by resuming (and increasing) our support to the Syrian opposition.  Similarly, even after Iraq’s problematic elections, I think the United States could help strengthen Iraqi nationalists seeking an independent Iran that would reduce or eventually, even eliminate Iran’s influence there.  I think the military offensive against the Houthi-held port of Hudaydah in Yemen is necessary to create the political leverage to get a deal to end the civil war and remove the Iranian presence there.

That said, I remain conscious of the limitations on American power and the ability of Iran to retaliate in various ways and places.  Consequently, my proposed approach would shy away from confronting Iran in areas where it is stronger than we are, Lebanon first among them.  I advocate remaining in (or rejoining) the JCPOA because doing so would bolster our alliances with European and East Asian states whose help would be useful, if not necessary, in dealing with Iran’s inevitable responses.  Finally, I think it useful for the United States and its allies to begin to develop the capability to pursue regime change in Tehran by covert and cyber means.  However, I would hold it in check as a deterrent against an overreaction by Iran.  I would not try it out in the short-term or make regime change an immediate goal of the policy.  But as long as Tehran knows that the United States has been building a capacity to destabilize or even overturn the Islamic regime, it will likely moderate its own responses.

Related reading:

It is long past time to confront the Castro regime’s international crime spree - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Fri, 07/06/2018 - 15:20

For six long decades, most of the international community has treated Castro and his cronies in Havana as bona fide government officials rather than the gangsters that they are. As a result, Cuba’s international crime spree continues with impunity, lately in Venezuela — whose economy has been looted and where a narco-state holds power under Havana’s management. After 60 years with no change in behavior, it is long past time to try a new approach by confronting Castro’s international crime spree.

Venezuela’s President Nicolas Maduro (R) shakes hands with Cuba’s President Raul Castro during the welcoming ceremony of an ALBA-TCP alliance summit to mark fifth anniversary of the death of Venezuela’s late President Hugo Chavez in Caracas, Venezuela March 5, 2018. REUTERS/Marco Bello

At my testimony before a subcommittee of the US House Committee on Government Reform and Oversight, I shared reports about the direct involvement of the Castro clan in the drug trade:

According to a colleague of mine who monitors activities in Venezuela, an active duty Venezuelan military officer informed US law enforcement in May of this year that Cuban military personnel — coordinated directly by Cuban army Gen. Luis Alberto Rodriguez Lopez Callejas, Raul Castro’s son-in-law — are directly involved in smuggling cocaine through the port of La Guaira, with most of the drug shipments bound for Europe and west Africa.

Few credible observers deny Venezuela’s status as a narco-state whose senior officials and agencies are directly involved in smuggling cocaine to North America and Europe. It is no coincidence that the Venezuelan institution most deeply involved in drug trafficking is the same institution over which the Cuban government has the most influence, the Venezuelan military.

Castro agents have been micromanaging Venezuela’s military and internal security apparatus almost since Hugo Chávez took power — spying on regime officials to root out any malcontents and to reinforce control over the armed forces. With the blessing of Chávez and his successor Nicolás Maduro, Cuban intelligence and security agents are embedded throughout the Venezuelan state. Cuba also has been instrumental in brokering and maintaining the working relationship between the Venezuelan military and Colombian narco-guerrilla groups that form the backbone of the Venezuelan narco-state.

As I testified,

[This] ongoing criminal conspiracy on our doorstep — which has converted Venezuela into a platform for narcotics trafficking, money laundering, embezzlement, extortion, and political destabilization — demands an urgent and effective response from the US national security establishment. As the Trump administration and the bipartisan leadership in Congress confront the regime of Nicolás Maduro in Caracas, we must, at long last, deal with his handlers in Havana who are micromanaging Venezuela’s destabilizing behavior.

My testimony hit a nerve in Havana, provoking a disappointingly lame and error-laden response from the regime-approved “press.” Whether it is the brazen murder of civilian pilots on a humanitarian mission, working with North Korea to bypass international weapons sanctions, or facilitating the creation of the destructive narco-dictatorship in Venezuela, Cuba uses crime as a weapon.

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Ranking Trump’s supreme court choices - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Fri, 07/06/2018 - 14:31

Justice Anthony M. Kennedy handed Republicans something of a gift when he announced his retirement. Assuming Donald Trump’s pick to replace Kennedy gets confirmed – about which, more later – the oldest conservative justice would be Clarence Thomas, at age 70. Even if Trump does not get any more Supreme Court picks, conservative control of the court is likely to continue for the next decade.

FILE PHOTO – U.S. Supreme Court Justice Anthony Kennedy arrives for U.S. President Donald Trump’s address to a Joint Session of Congress in Washington, U.S., February 28, 2017. REUTERS/Joshua Roberts/File Photo

More importantly, this is likely to be conservative control unlike anything we’ve seen since the 1930s. To be sure, Kennedy’s “moderation” was always overstated, and this has been a quite conservative court. Kennedy was not moderate, he was heterodox, meaning that he held some views that were atypical for conservative judges, but those views were often strongly held. Contrast his majority opinion in Obergefell, establishing a right to marriage regardless of sexual orientation, with the dissent he joined in NFIB, which would have struck down Obamacare in its entirety. His heterodoxies just happened to manifest on issues such as abortion, marriage equality, and the death penalty, issues that are of particular interest to liberals.

Regardless, that heterodoxy is soon to be gone, at least on the current ideological matrix (Franklin Roosevelt’s appointees were all “liberal,” but as the court’s agenda shifted from economic issues to civil liberties, new divisions emerged). To emphasize: All of the potential justices I cite below would likely be more conservative than Kennedy. It is almost pointless to write about their ideological orientations, as doing so would run something like: “Makes Clarence Thomas look moderate,” “very conservative,” “very, very conservative” and so forth.

Instead, I am simply going to rank them from the point of view of what they bring to the table for Trump and for judicial conservatives (liberals, of course, can read this in reverse order). Again, the main takeaway is that these prospective justices would all mark a shift to the right in the court’s jurisprudence, and will at the very least put the brakes on the few advances liberals were able to make under Kennedy.

7. Mike Lee: To be honest, it is a bit surprising that the Republican senator from Utah made Trump’s final list of seven. Not because he’s a politician – appointing politicians to the Supreme Court was once a fairly routine practice for presidents. Only three of the 12 court picks that Franklin Roosevelt and Harry Truman made had served previously as judges, and two of those had previous political experience. Nor is it because of some lack of conservatism, as he would probably be poised to carry the flame of Clarence Thomas’s originalism for the next 30 years.

Instead, Lee falls short because of the dynamics surrounding the pick. Republicans have a narrow 51-49 edge in the Senate, and John McCain is unlikely to return to the chamber anytime soon. In other words, if Republicans lose a single vote and no Democrat defects, the nomination will fail.

The two most likely Republican defectors are Susan Collins and Lisa Murkowski. Both women are personally pro-choice, and they represent the two states with the highest percentage of voters who favor legal abortions of any Republican senators. Collins has stated that she wouldn’t vote for a nominee who would vote to overrule Roe v. Wade.

Collins’ statement has quite a lot of wiggle room, as she also expressed doubt that Justice Neil Gorsuch, who is probably as conservative as any member of the court, would vote to overrule Roe. But Lee stands out for his rather outspoken pro-life views, and having served in the Senate conference with Lee, Collins is doubtless aware of his views on Roe. So Lee’s problem is straightforward: He’s probably unconfirmable.

6. Thomas Hardiman: Hardiman, a judge on the United States Court of Appeals for the Third Circuit, was Trump’s runner-up to fill the seat of Antonin Scalia. But unlike some of the names that follow, Hardiman wasn’t on the list because he was a favorite of the conservative base. He was on the list because he was a favorite of Trump’s sister, who served with Hardiman on the Third Circuit, and because he clicked with Trump during his interview.

Part of why I rank Hardiman this low is that I think his time has probably passed. Trump relies heavily on family advice, but he’s had time to build a larger circle of advisers that he trusts. Trump also knows how important the Gorsuch appointment was to keeping his favorability ratings within the Republican Party high during some turbulent times, so I think he’ll look for someone who is more popular with the base (and who would be more reliable for the base). If Hardiman were to be confirmed, his record suggests a workmanlike, conservative jurisprudence, but not one that is as likely to result in conservatives singing his praises for decades to come.

5. Joan Larsen: Larsen is a recent appointment to the United States Court of Appeals for the Sixth Circuit, after serving a brief stint on the Supreme Court of Michigan. Basically, I think Amy Coney Barrett, described below, has all of Larsen’s pluses and minuses, with a few more pluses.

4. Amul Thapar: Amul Thapar served for nine years on the United States District Court for the Eastern district of Kentucky, before becoming Trump’s first Circuit Court nominee. He has sat on the Sixth Circuit for a little bit more than a year. His pluses for conservatives are fairly straightforward: He would be the first South Asian Supreme Court justice, his judicial background suggests a commitment to originalism, and he is one of the youngest nominees. He checks all the boxes for conservatives; his only negative is that the remaining three nominees are certifiable conservative rock stars.

3. Amy Barrett: At this point, we are down to the three choices from which I believe Trump will choose (I wrote this before it was reported that they were, in fact, his top three). Judge Barrett, a former clerk to Scalia and a Notre Dame law professor, became something of a cause celebre on the right when, during her Senate confirmation hearing for the United States Court of Appeals for the Seventh Circuit, Sen. Dianne Feinstein expressed what some considered to be anti-Catholic sentiments by suggesting that “the dogma” lived loudly within Barrett.

As far as “intangibles” go, Barrett is the clear leader of the three finalists, and probably of the entire bunch. She is young, telegenic, is the mother of seven children (including two adopted from Haiti), and is devoutly religious. This, combined with Feinstein’s questioning of her religiosity, would probably help improve Republican enthusiasm about voting in the fall (at least to the extent that Supreme Court nominations can be a salient factor in vote choice). In addition, she would place Sen. Joe Donnelly of Indiana on the horns of a dilemma during a hard-fought re-election campaign: risk angering his Democratic base, or risk angering moderately conservative Republicans in the state, some of whose vote he needs in order to have a chance at winning. Overall, Democratic activists are almost spoiling for this fight, but I’m not sure it’s a fight they are likely to win.

So why is Barrett last of the final three? Two interrelated reasons. First, she has served on the Seventh Circuit for less than a year. This raises some fair questions about her qualifications for a Supreme Court seat. We have had justices with short tenures on Circuit Courts – or no judicial experience – elevated to the high court before, but most of them had either served on a state court (David Souter), run an administrative agency or served as solicitor general (Clarence Thomas, Elena Kagan), or been a lawyer of national renown (Louis Brandeis). These questions would probably not get a lot of traction, but they are fair questions, and are certainly not issues with the top two.

Second, she probably has the highest “squish” potential of the top three, although it is probably a low potential. Without a lengthy paper trail, conservatives are relying in part on things such as her family and Federalist Society membership to infer where she stands on questions of judicial interpretation. This isn’t unreasonable, but all of the judges on this list have been indirectly blessed by the Federalist Society. To be sure, even judges with lengthy records can “evolve” (see Blackmun, Harry), but the lack of a paper trail results in more guesswork as to how a justice will rule (see Souter, David). At just 46 years old, it is likely that Barrett will be eligible for another opening during her lifetime; it may make more sense to allow her to develop a record, and to hold her for one of those slots.

2. Raymond Kethledge: On Judge Kethledge, we can be brief. Kethledge has a lengthy record of service on the Sixth Circuit with few indications of ideological deviation, is a brilliant writer, and holds some of the positive intangibles of Barrett (Kethledge enjoys hunting, is from the Rust Belt, and has experience teaching at a top-ranked law school) without some of the baggage. The personable Kethledge would probably be the most confirmable judge of the top three, although that might not be something Republicans are hoping for. In many ways he might be the most well-rounded pick, but the last judge brings something important to the table . . .

1. Brett Kavanaugh: In the interest of full disclosure, I worked as a summer associate with Judge Kavanaugh when he was a partner at Kirkland & Ellis in 1999. With that said, I haven’t spoken with him in over a decade, and am unsure he would even remember me.

Kavanaugh is probably the most controversial among the top three picks, as he makes both conservatives and liberals uneasy. Liberals would be uncomfortable with his work for Independent Counsel Ken Starr and the George W. Bush administration, while conservatives worry about his ruling that they believe laid the intellectual foundation for John Roberts’ decision to uphold Obamacare.

The latter concern, at least, is misplaced, as Kavanaugh was ruling on mootness, a separate claim unrelated to the overall merits of the Obamacare claim. Nevertheless, his ties to Bush and Starr would probably cause Democrats to launch a full tilt campaign against him similar to the one that would be launched against Barrett, without exciting conservatives to the same degree that Barrett would.

So why would conservatives want him? The answer is simple: Since Scalia’s death, conservatives have been without a William Brennan. What on Earth does that mean? Courts are usually divided into eras by chief justices (the Burger Court, the Rehnquist Court), but the chief is rarely the leading intellectual on the court. The chief justice is charged with a bevy of administrative tasks and institutional responsibilities.

So, while we have the “Marshall Court,” it was Justice Joseph Story who often did the work of assembling the precedents and writing some of the more memorable opinions. With the “Warren Court,” William Brennan was often the one who, in consultation with the chief, would put together the winning coalition for the liberal position. The genial Brennan was responsible, in part, for shaping Blackmun’s leftward tack, and for extending Warren Court precedents longer than anyone thought possible. Moreover, Brennan was a brilliant jurist and a gifted writer. Very few law students ever stood and cheered for an Abe Fortas opinion, but even the most conservative law students perk up when they have to read a Brennan opinion, and probably even have a Brennan quote or two that they admire.

Scalia served as the intellectual leader of the right during the Rehnquist and early Roberts courts. While he didn’t quite have Brennan’s coalition building skills (and may even have alienated some center-right jurists with his scathing dissents), the genial Scalia was a gifted ambassador for the court, who helped define what it meant to be a conservative justice in a post-Warren Court era, and even shifted the terms of the debate on several issues (his solo dissent in Morrison v. Olson — which declared the Independent Counsel Act constitutional — is considered particularly persuasive). If one mentions “pure applesauce” or “argle bargle” to friends who follow the news, many will get the reference. Scalia was, in short, immensely influential, and is probably the only rival to Brennan in terms of influential late-20th century justices.

Since Scalia’s death, though, conservatives have been without an intellectual leader. Kennedy certainly would not fill that role. The chief justice might have, had he been named an associate justice as was originally planned, but he is nevertheless chief justice. Gorsuch and Thomas are likely too idiosyncratic; they are more in the vein of William Douglas than William Brennan (these are admittedly fine hairs to split, but I think they are illustrative if taken for what the approximations that they are).

Judge Kavanaugh, however, could fill this role. His conservative credentials are nearly impeccable, and those concerned about his dissent in the Obamacare cases should remember Scalia joining Brennan’s opinion striking down flag-burning statutes. Additionally, he is, quite simply, one of the most brilliant individuals I have ever encountered. He is also a truly gifted writer. At Kirkland, we were instructed to make our briefs “sing”; his first drafts were legendary for already being full operas, and that was before he turned to the task of rewriting them dozens of times. Kavanaugh would arrive to the court well-respected by the other justices, as most of them have hired his clerks (which is unusual in this day and age). I suspect that in two decades, constitutional law nerds would speak of the Kagan-Kavanaugh clashes with the same reverence my generation holds for the Brennan-Scalia battles.

In short, most of the judges on this list would result in fine outcomes for conservatives. The second and third picks might even provide more of what conservatives want. But the first pick would give them what they need.

Sean Trende is senior elections analyst for RealClearPolitics. He is a co-author of the 2014 Almanac of American Politics and author of The Lost Majority. He can be reached at strende@realclearpolitics.com. Follow him on Twitter @SeanTrende.

Voluntary drug price restraint didn’t work in the 1990s, and won’t now - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Fri, 07/06/2018 - 14:00

In late May, President Trump announced that, within two weeks, major pharmaceutical companies would agree to large, voluntary price concessions. Restraining drug prices was a major theme of Trump’s campaign for the presidency, so it is not surprising that he is eager for some prominent drug manufacturers to publicly signal plans for holding prices down, for which he will then claim credit.

@Terralyx via Twenty20

Trump isn’t the first president to pressure drug companies on their prices. Bill Clinton campaigned on ending pharmaceutical “price gouging.”  Once in office in 1993, he and First Lady Hillary Clinton proposed limits on drug price inflation in their health reform plan. They also wanted to create an independent panel to oversee the industry’s pricing decisions.

The Clinton plan rattled drug manufacturers. To slow the plan’s political momentum, several major companies stepped forward in early 1993 and said they had “turned over a new leaf” on pricing. For three years, they would keep aggregate price hikes within the general rate of inflation, which the industry estimated would save consumers $7 to $9 billion during that period.

The drug industry’s 1993 commitment to voluntarily price restraint had no lasting effect on what Americans pay for drugs, but it may have contributed to the demise of the Clinton reform plan. The push for government-enforced drug price controls began to fizzle in 1994 as the economy improved and more Americans gained insurance coverage. The industry’s voluntary efforts also may have reduced the effectiveness of the administration’s criticisms with voters. As the year wore on, Democrats in Congress began to abandon the sinking Clinton reform plan, which failed to pass in either the House or the Senate. Republicans then took control of Congress in the mid-term election.

After the failure of health-care reform in 1993–94, the Clinton administration never regained momentum on drug pricing, and nothing meaningful was put into law during the remainder of the president’s time in office. Drug price inflation did slow temporarily in the mid-1990s, falling from 3.3 percent in 1993 to less than 2 percent in 1995. But beginning in the late 1990s, prices surged, rising by an average of 5 percent annually over the period 1998 to 2002.

Voluntary price concessions don’t work because they are always temporary in nature. Even if they produce short-term results, later price hikes can make up for the lost ground, and then some.

It is also easy for the industry to make promises that sound good but don’t amount to much because of the many different ways drug companies can alter their revenue streams. What matters to these companies is their total revenue, which is a function of overall sales and net prices.

Drug manufacturers sell to both public and private payers, and offer various discounts based on what will maximize their sales and profits (as they should). They can promise to hold retail prices below a fixed rate and still boost revenue by limiting the discounts and rebates they offer at various points in the supply chain, or by offering lower net prices only when sales hit certain milestones. They can promise to restrain prices for public purchasers and for the beneficiaries enrolled in publicly-sponsored insurance, and then raise prices for their commercial customers. Further, they can make up for revenue lost from low annual price hikes by setting their initial prices higher for new products, by running up prices just before voluntary restraints take effect, and by repackaging existing products in ways that make prior year comparisons difficult.

In addition, anti-trust law will be a major obstacle to a serious industry-wide effort. Drug company executives working together to collectively set prices for their products over a multi-year period would seem to be a textbook example of anti-competitive behavior, and thus vulnerable to litigation. Consequently, it is more likely that individual companies will devise their own voluntary price restraint pledges, which may or may not match up with the commitments of other companies. The combined result is likely to be less meaningful than a uniform, industry-wide commitment would be.

It has been more than a month since President Trump teased the prospect of voluntary price restraint by the drug industry, and there’s still no sign of an imminent announcement. That doesn’t mean there won’t be one eventually. In fact, if anti-trust concerns can be addressed (a big “if”), it is probably in the interest of the drug companies to give the president something that he can call a “win” because, as was the case in 1993, a low-cost, voluntary effort might head off worse outcomes for the industry.

The president’s point person on drug pricing — the Secretary of Health and Human Services, Alex Azar — has downplayed what might come from voluntary restraint by the industry, even as he has also issued warnings that companies announcing big price hikes will come under additional scrutiny. In recent days, several companies have signaled relatively large price hikes for their products for the second half of this year, which may be an indication that they don’t consider themselves particularly vulnerable to unilateral action by the administration.

The failure of voluntary price restraint by the drug industry in the 1990s isn’t likely to dissuade President Trump from wanting to secure a public commitment to lower prices from the drug industry. The public relations value of a White House event with pharmaceutical executives pledging price cuts, no matter how illusory, is probably too appealing for this administration to resist.

There are no simple solutions to high drug prices, which are primarily a function of the nation’s patent and drug safety laws. Companies that can bring effective and innovative therapies to market are rewarded with a limited period of strong pricing power. The purpose of these laws is to encourage companies to take the necessary risks to research and develop products that can deliver substantial health benefits to patients. The only way to hold down prices without simultaneously compromising the incentive for medical progress is to encourage more product competition where that is possible while also allowing purchasers to combine their buying power in order to increase their leverage with the manufacturers of patented products.

Azar and his aides are pursuing a number of initiatives that might eventually, if refined and improved, create more downward pressure on the prices of pharmaceutical products. But their plan is complex, still in development, and won’t produce noticeable results for consumers anytime soon.

That timeline is unlikely to satisfy an impatient president. He wants a quick and high-profile “win.” But history shows that the primary beneficiaries of the price restraint announcement from the drug industry that he craves might turn out to be the drug companies themselves.

What is ‘patriotism’? - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Fri, 07/06/2018 - 13:58

There are many definitions of patriotism. Mark Twain said patriotism means supporting your country all the time and your government when it deserves it.

I like this, but it’s flawed. Sometimes your country — i.e., the people — can do things that require the government to correct its citizens. That’s why we have a Bill of Rights. Sometimes “we the people” are wrong, and the individual is right. That’s what G. K. Chesterton was getting at when he said, “‘My country, right or wrong’ is a thing that no patriot would think of saying. It is like saying, ‘My mother, drunk or sober.’”

In other words, patriotism is a simple concept in the abstract — “love of country” — but it can be complicated in its application.

I love my daughter deeply, but that love does not mean unconditional support for everything she does or wants to do. Sometimes the greater act of love is to say “No” or “You’re wrong.” But I think all reasonable people can agree that any father who says to his daughter, “I wish you were never born,” does not love his child.

Which brings me to a Fourth of July essay written for Vox, “Three Reasons the American Revolution was a Mistake,” by Dylan Matthews.

He begins: “This July 4, let’s not mince words: American independence in 1776 was a monumental mistake. We should be mourning the fact that we left the United Kingdom, not cheering it.”

Matthews’ three reasons: The American Revolution prolonged slavery; independence was bad for Native Americans; and we would have a better system of government if we had a parliamentary system like other former colonies of the British crown.

Now, I could argue against all these propositions, but that’s not the point I want to make. Instead, let us concede them for argument’s sake.

It strikes me as incontrovertible that this is an unpatriotic argument.

That is not to say it is an evil, dishonest, or treasonous argument. But if the dictionary definition of patriotism is “devoted love, support, and defense of one’s country,” then dispassionately arguing that it would be better if the United States of America had never existed strikes me as a singularly unpatriotic thing to do.

And that’s okay. Oh, I disagree with Matthews, but it has always struck me that the cultural prohibition against ever “questioning” someone’s patriotism tends to confuse more than it clarifies. During the George W. Bush years, it was a cliché of the Left to insist that “dissent is the highest form of patriotism.” Of course, once President Obama came into office, dissent became synonymous with racism according to many of the same people.

By the way: It’s simply not true that dissent is the highest form of patriotism. As my National Review colleague John O’Sullivan puts it: Dissent is the highest form of patriotism. Treason is the highest form of dissent. Ergo, treason must be the highest form of patriotism.

This points to the problem with the schizophrenic way we talk about patriotism. Too often it is an anathematizing word used to brand someone as a heretic or traitor. That’s how Senator Joe McCarthy used it, and one finds versions of it on the nationalist Right every day. But since the McCarthy era, we also cast the act of questioning someone’s patriotism as somehow treasonous or evil, too. “How dare you question my patriotism!?” is one of the great conversation stoppers.

Of course, some forms of dissent are, indeed, rooted in patriotic love of country. But some dissent is rooted in disdain, contempt, or even hatred for this country. And some dissent is simply informed by a kind of cosmopolitan indifference to American exceptionalism. These attitudes are more prevalent on the left than the right, but they are not unknown to the right. One of my intellectual heroes, Albert Jay Nock, often commented that he’d be just as happy to live in Belgium as America.

I think we simultaneously expect too much and too little of the concept of patriotism. An atheist by definition has no love of Jesus or the divine. That doesn’t mean an atheist cannot be a good person. Indeed, one of the best things about atheism is its honesty. We have no word for the person who doesn’t have special affection for our country that isn’t freighted with negative connotations. It seems the moment is ripe to coin one.

Ant-Man and the Wasp and criminal justice reform | In 60 Seconds - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Fri, 07/06/2018 - 13:25

AEI’s Stan Veuger explains that one policy intended to improve the lives of former criminals could even help a certain superhero.

Will the American tradition of community banking survive the 21st century? - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Fri, 07/06/2018 - 10:48

This AEI Events Podcast features economic policy experts discussing the future of community banks. Chairman Blake Luetkemeyer (R-MO) gave a keynote address about his personal experience in banking, the upcoming bill related to community banking, and its potential to help community banks and consumers nationwide.

Following Chairman Luetkemeyer, AEI’s Paul H. Kupiec highlighted the nationwide decline in community banks, especially after the 2007–08 financial crisis. New York University’s Richard Sylla provided a brief historical overview of community banking in the United States, including the growing number of small banks from 1782 to 1920, which contrasts with trends in other advanced economies.

Thomas Hoening, the outgoing vice chairman of the Federal Deposit Insurance Corporation, spoke about the macroeconomic indicators underscoring the good economic health of community banks as a whole. He also discussed the need for reforms to improve the future of community banks. Oliver Ireland of Morrison & Foerster LLP stressed the prohibitive regulatory costs on small banks. Rebeca Rainey of Independent Community Bankers of America spoke about the interdependence of small banks and rural communities, which plays an important role in stimulating economic growth. She also discussed emerging challenges for small banks and how these banks can use technological and financial innovations to thrive in the long run.

This event took place on May 9, 2018.

Watch the full event here.

Subscribe to the AEI Events Podcast on Apple Podcasts.

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