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Thirty years ago, NASA scientist James Hansen put greenhouse-effect warming on the map with his strident testimony indicating that global temperatures could then confidently be related to changes in atmospheric carbon dioxide. Two years ago, he made another prediction: several meters of sea level rise in this century. He told Scientific American:

Consequences [of climate change] include sea level rise of several meters, which we estimate would occur this century or at latest next century, if fossil fuel emissions continue at a high level. That would mean loss of all coastal cities, most of the world’s large cities and all their history.

There’s only one way to accomplish this: melt a substantial portion of Greenland’s ice. In fact, as early as 2004 he wrote Greenland could a substantial portion of its ice in 100 years with the warming of this century, causing a total sea level rise of nearly 20 feet.

Fortunately, there are ways to test the hypothesis that Greenland is about to shed like a calico cat in the summer.  It turns out Greenland has experienced multiple millennia of heat at times during the last 125,000 years.

The last two million years or so have been punctuated by (at least) four major ice ages. The reigning theory is that they are driven by slight but predictable variations in earth’s orbit around the sun, as well as the opening of the circumpolar Southern Ocean and the rise of the Himalayas. Our orbit is an ellipse in which the relation to the sun changes over time. Right now, earth is closest to the sun in Northern Hemisphere winter, and furthest away in summer.  Under some conditions, that would lead to an ice age, but the seasonal distances between earth and sun also precess with time, and our orbit is right now quite circular. That makes the winter-summer difference small, preventing another ice age.

At the end of each of the last two ice ages, earth and sun lined up in a position where they are closest in Northern Hemisphere summer, and the orbit was highly elliptical, which means excess sunshine in the high latitudes, warming Greenland, and northern Eurasia and North America—a lot.

The Arctic tundra holds many secrets, including the fact it was once forested. It’s now too cold for trees, but we also know how warm it has to be for trees to survive. Dying trees buried in highly acidic peat are preserved remarkably intact. Here, for example is a log, radiocarbon dated at 6,000 years old that looks like new wood:

We became interested in this years ago, with the 2000 publication by Glen MacDonald, of UCLA, and several colleagues, showing that from roughly 7,000 to 9,000 years ago, “mean July temperatures along the northern coastline of Russia may have been 2.5° to 7.0°C [3.6° to 12.6°F] warmer than modern.” This is consistent with the 2016 finding of Jason Briner (University of Buffalo) that the difference between warmest and coldest postglacial millennia is 5.4° +/- 1.8°F in Arctic Canada and Greenland. Last year, dating buried wood and cones, Leif Kullman found high latitude summer temperatures at least 3.6°C [6.5°F] warmer than today, between roughly 6,500 years to 11,200 (!) years ago.

What did all this mean for Greenland? According to a very recent paper by Lisbeth Nielsen of University of Copenhagen, all that warming melted enough ice to raise sea level between ~0.15-1.2m (0.5-4.0 ft) over several thousand years. That’s a far cry from Hansen’s 20 feet in a hundred years, and it’s telling that the 2016 Briner finding and Hansen’s forecast were concurrent.

It’s also noteworthy that, due to all this arctic warming, “Arctic sea ice cover was strongly reduced during most of the early Holocene and there appear to have been periods of ice free summers in the central Arctic Ocean.” And yet this creature survived:

All this recent research is consistent with a landmark 2013 paper by Dorthe Dahl-Jensen and several colleagues from the University of Copenhagen, who drilled a core through the     Greenland ice to the beginning of the previous interglacial–125,000 years ago, through the millennia known as the Eemian warmperiod.

If one thinks it was warm at the beginning of the current interglacial, the beginning of the last one was sweltering at high northern latitudes, given the Dahl-Jensen data. It used to be thought that a 6,000 year period, centering around 118,000 years ago, was around 3.6-5.4°F (2-3°C) warmer in summer than the 20th century average for Greenland. But data in their core showed it averaged 10.4-14.0° (6-8°C) warmer in summer for 6,000 years. And for all of that, they estimate that Greenland lost about 30% of its ice, which would raise sea level about about 1.38 inches per century over these six millennia. Not a Hansenian 20 feet, in a hundred years, but about 6/1000’s of that.

Quantitatively, here’s why Hansen’s hypothesis is wrong.

Assume that the six-millenia Eemian averaged around the lower level of Dahl-Jensen’s estimate, some 6°C warmer in summer. That means the melting heat-load (Greenland’s ice melts every summer) over Dahl-Jensen’s core region (northwestern Greenland) was:

6000 summers X 6°C = 36,000 degree-summers.

It’s doubtful we are going to warm our atmosphere with increased carbon dioxide for anywhere near 1,000 years, and climate models project a summer warming around Greenland in the top range of around 5°C.  But let’s assume these pessimistic parameters.

Although this is likely a huge exaggeration of the heat that humans could possibly unload on Greenland, it is

1000 summers X 5°C = 5,000 degree-summers.

Therefore, in a 1000-year worst-case scenario we will only melt a small fraction of Greenland’s ice, compared to the loss in the 6000-year Eemian.

That’s a far, far cry from Jim Hansen’s 20 feet in 100 years. When his alarming sea-level rise hypothesis comes up (as it will) around the 30th anniversary of his 1988 testimony on June 23, rest assured that thousands of years of ice core data—real data instead of a speculative hypothesis—show the Greenland-driven disaster scenario to be simply untrue.

For years, the Justice Department’s Bureau of Alcohol, Tobacco, and Firearms has maintained that “bump stocks”—devices that allow a firearm to reciprocate slightly and assist in “bump firing”—are not “machineguns.” From 2007 to 2017, spanning multiple administrations (including the current one), the ATF issued 10 different opinion letters confirming that the devices were not “machineguns” or “machine gun conversions,” and thus did not fall under the purview of the National Firearms Act of 1934 and Gun Control Act of 1968, two federal laws which heavily regulate machine gun ownership.

Under federal law, a “machinegun” is a device “which shoots … automatically more than one shot … by a single function of the trigger.” With language so clear, the provision was never considered ambiguous by a reviewing court over 80 years of decisions—and the ATF’s interpretation remained consistent. It is for this reason that bump stocks, and crank-operated “Gatling guns,” while having a high rate of fire, have never been considered “machineguns.” (Yes, virtually anyone can own a Gatling gun under federal law.) What could change the state of such settled law, then? Political expediency.

After the October 2017 mass shooting in Las Vegas, where the shooter used a bump stock, President Trump made clear that he intended to see the devices banned “without going through Congress.” The administration then announced that it intended to “clarify” the NFA and GCA to include bump stocks within the statutory definition of “machinegun.” The issue is, of course, that no amount of “clarification” can lawfully make a statute say something it does not. That, however, did not seem to deter the ATF when it published a Notice of Proposed Rulemaking in March, threatening to stretch statutory language beyond the point of tearing, all in an attempt to use an 83-year-old law to do away with bump stocks.

Our Constitution requires that new laws be brought through Congress, not shoehorned into old ones by executive agencies. In that light, we have filed a regulatory comment, expressing our view that the ATF’s new “interpretation” is an attempt to force new restrictions as a matter of political expediency, not a good faith interpretation of existing law. The president undoubtedly has the authority to direct the actions of his principal officers, but when those directions urge the reversal of longstanding previous interpretations based on an unambiguous statute, they smell more of an attempt to improperly change the law than a valid exercise of constitutional authority.

The most fascinating phenomena of American politics is the increasingly anti-immigration opinions of politicians like Donald Trump that contrasts with an increasingly pro-immigrant public opinion.  Gallup has asked the same poll question on immigration since 1965: “In your view, should immigration be kept at its present level, increased, or decreased?”  Gallup’s question does not separate legal from illegal immigration, likely meaning that answers to this question undercount support for increasing legal immigration.  They recently released their 2018 poll results.  The support for increasing legal immigration is at 28 percent – the highest point ever (Figure 1).  Support for increasing immigration is just one point below support for decreasing immigration – well within the 3-point margin of error (95% CI). 

Figure 1

Gallup: Should Immigration Be Kept at Its Present Level, Increased, or Decreased?

Gallup

Sources: Gallup.

The Gallup trend is the clearest and best for those of us who support increasing immigration but the General Social Survey shows a similar directional trend – although not nearly so dramatic (Figure 2).

Figure 2

GSS: Should Immigration Be Kept at Its Present Level, Increased, or Decreased?

GSS

Source: General Social Survey.

If the public is increasingly pro-immigration, why is the GOP so opposed to immigration?  It can’t be radically divergent opinions across partisan lines. According to the Gallup poll, 65 percent of Republicans think immigration is good for the country compared to 85 percent of Democrats.

Another possibility is that anti-immigration voters care a lot more about the issue than pro-immigration voters and are willing to change their votes based on it.  For pro-immigration voters, immigration just isn’t their biggest issue.  The Gallup poll hints at this as 55 percent of those who are dissatisfied with the current immigration levels want to cut the numbers while only 22 percent who are dissatisfied want to increase the numbers.

Another issue is causality as anti-immigration politicians could be pushing moderate Americans into a more pro-immigration position.  The crude language used by nativists, such as President Trump’s description of illegal immigrants as an infestation, can turn off a lot of voters in the same way that the Prop 187 campaign in California in the mid-1990s convinced a lot of white voters to not support the GOP.  This is the exact worry that Reihan Salam, a moderate restrictionist, voiced. The spokesman for political issues matters and Trump is not a very good one.

Another potential explanation is the “locus of brutality,” a riff on the locus of control literature that says voters are more supportive of liberalized immigration when they perceive it to be controlled.  Under that theory, border chaos, illegal immigration, refugee surges, and the perception of immigrant-induced chaos increases support for restriction.  Thus, countries with open immigration are mostly able to maintain those policies so long as it appears orderly.  Since disorder usually arises from poor government laws, this means that more regulation can make it more chaotic and create demand for more legislation in an endless cycle.  That locus of control pattern could be countered by the brutality of immigration enforcement such that voters become more pro-immigration when they are confronted with the government’s brutal enforcement of immigration laws.  Prison camps for immigrant children thus create support for liberalization.

My final theory is that this is the last gasp of nativism.  Lots of dying political movements that are terminally ill due to shifting public opinion go all out as it is their last chance to get elected.  Think George Wallace and segregation.  During the 2016 campaign, then-Senator Jeff Sessions said that that was the “last chance for Americans to get control of their government.”  When it comes to changes in the public trends and support for cutting immigration, he is probably correct.

The public is becoming increasingly pro-immigration.  The Democratic Party is increasingly reflecting that changing public opinion while the Republican Party is getting an increasing percentage of that shrinking but sizable anti-immigration majority.  There will come a point, should public opinion continue to support increasing immigration, where both parties will adopt this position.

The House is scheduled to vote tomorrow on a bill—the Border Security and Immigration Reform Act, the supposed GOP compromise bill. The authors claim in their bill summary that “the overall number of visas issued will not change,” yet that is simply incorrect. In fact, the proposal would reduce legal immigration at least 1.4 million over 20 years.

The bill would reduce the number of legal immigrants in five ways: 1) eliminating the diversity visa lottery, 2) ending sponsorship of married adult children of U.S. citizens, 3) ending sponsorship of siblings of U.S. citizens, 4) restricting asylum claims, and 5) indirectly by restricting overall immigration, which will lead to fewer sponsorships of spouses, minor children, and parents of naturalized citizens years later. The bill partially offsets these effects by increasing employer-sponsored immigration and by granting permanent residency to some Dreamers in the United States, but the net effect is still strongly negative.

Table 1 breaks down the cuts to legal immigration by category over the 20-year period from 2020 to 2039. The net effect is a reduction in legal immigration of 1.4 million including Dreamers or 2.1 million not counting Dreamers toward the total. This is a cut of 7 percent or 10 percent in the number of legal immigrants that would have been allowed to enter under current law.

Table 1: Difference in the number of legal immigrants

Eliminating the diversity visa lottery (#1) would reduce legal immigration by about 1 million over 2 decades; ending the sponsorship of married adult children of citizens (#2) by about 465,000, ending the sponsorship of siblings of citizens (#3) by 1.4 million; restricting asylum (#4) by about 260,000; and limiting overall immigration (#5) would indirectly reduce sponsorships of spouses, minor children, and parents of U.S. citizens by almost 218,000. The bill would increase employer-sponsored immigration by almost 1.3 million and would provide permanent residence to about 700,000 Dreamers.

In an earlier post, we calculated the number of Dreamers likely to legalize and then receive permanent residence under the House bill. We explained that due to the exceptionally restrictive requirements in the bill, which are much more restrictive than the already quite limited DACA program, we estimated that only 698,620 would end up receiving permanent residence. We used our previous estimate of the effects of the restriction on asylum in this bill, requiring them to prove their claims at the border at a much higher standard. We estimated that it would cut the number of asylees in half, but it could be even more severe.

We used a statistical model to calculate how many fewer immediate relatives—spouses, minor children, and parents—of U.S. citizens would be sponsored if the other categories are cut.[i] Because immigrants can naturalize and marry a foreigner or sponsor their parents, they trigger increases in the immediate relative category after 5 years. We discounted the effect of Dreamers on increases in this category by 20 percent because the vast majority of them cannot sponsor their parents because their parents crossed the border illegally (some parents, who entered with legal visas, could be sponsored).

Table 2 compares the single year flows in 2019 to 2029, showing how, after just 10 years (and after the Dreamers all receive their green cards), the annual cut would be 11 percent relative to 2019.  Going forward to 2039, the annual cut would grow to 12 percent. Table 3 at the end of the post shows how the bill would affect each immigration category from 2019 to 2039. 

Table 2

It is important to note that almost all of the visa increases in the House bill would go to people already in the United States, whether Dreamers or employer-sponsored immigrants who are almost always already here in temporary worker visas. By contrast, all of the cuts to legal immigration are primarily of people outside of the United States, particularly in the family-sponsored categories and the diversity visa lottery. In other words, this legislation would do more reduce overall population growth than what these numbers suggest. 

In addition to reducing legal immigration, after 2019, the bill cancels the applications of people in the categories for married adult children and siblings of U.S. citizens who have waited in line for, in many cases, decades: nearly 3 million people. This adds unfairness to the economic harms associated with cutting immigration. 

Reducing legal opportunities to immigrate to the United States will only encourage more illegal immigration, going against one of the stated goals of the bill. Moreover, canceling the applications of legal immigrants would cause immigrants in the future to lose faith in the legal immigration system. This would further incentivize people to seek illegal avenues to come to the United States. 

At a time when U.S. population growth is at its lowest level since the Great Depression and the fertility rate has plunged to the lowest level on record, the United States needs more people, not fewer. Congress should increase the number of immigrant visas and create other opportunities that have proven to reduce illegal entry, such as more temporary work visas, allowing more people to enter the country lawfully. These approaches have proven to work, while cuts to legal immigration and a lack of legal work visas harm the U.S. economy and encourage more people to enter the country unlawfully.

Table3

 

 

 

 

[i] We used a vector autoregressive (VAR) model to estimate the effects of the cuts to legal immigration on the immediate relative category (spouses, minor children, and parents of U.S. citizens). A VAR models the relationship multiple variables of interest as they evolve together over time.  After estimating a VAR model, one can impose a shock to a variable of interest in one year and trace out how the shock impacts each variable over time, or an impulse response function (IRF). The impulse response function assumes that some shock occurs in a single year and traces out the shock’s impact over a forecast horizon.  This allows one to assess the impact of a shock to the non-immediate relative (IR) immigrant inflows on IR inflows over time, taking into account the dynamic, interrelated nature of these two variables. We delayed the effect of the cut until 6 years after the shock because the law requires at least five years residency prior to naturalization and sponsoring. Since these two variables are likely to be related to one another across time, one can compute orthogonalized IRF.  The orthogonalized IRF ensures that the shocks to each variable are independent of one another, i.e. so no feedback loop exists between each set of shocks.  To ensure that the shocks to the Non-IR category flows are independent of those to the IR category flows, orthogonalized IRFs are computed.  Additionally, each variable is expressed as its natural logarithm to account for non-stationarity in each time series. Credit to Andrew Forrester for his assistance with this model. 

On Wednesday members of the Senate Finance Committee questioned Secretary of Commerce Wilbur Ross about the costs to American businesses of the administration’s tariffs. Ross was unsympathetic:

When Thune warned that the drop in soybean prices (caused by China’s retaliatory tariffs) was costing South Dakota soybean farmers hundreds of millions of dollars, Ross responded by saying he heard the price drop “has been exaggerated.”…

Ross told Sen. Mike Enzi (R-Wyo.) that he’s heard the rising cost of newsprint for rural newspapers “is a very trivial thing,” and he told Sen. Benjamin L. Cardin (D-Md.) that it’s tough luck if small businesses don’t have lawyers to apply for exemptions: “It’s not our fault if people file late.”

That reminded me of then-First Lady Hillary Clinton’s response in 1993 to a small businessman about how her health care plan might raise his costs:

“I can’t go out and save every undercapitalized entrepreneur in America.”

Seems like lots of Washington operators don’t care much about the burdens that taxes, regulations, mandates, tariffs, and other policies impose on small businesses and their employees.

The Supreme Court issued a major separation-of-powers decision this morning, which may have more long-term ripple effects than the internet sales-tax case. In Lucia v. Securities and Exchange Commission, the Court rule 6.5-2.5 – I’ll explain shortly – that SEC administrative law judges are “officers of the United States” and thus must be appointed by the president or the “department head,” in this case the SEC itself (rather than being selected by commission staff). This is important because it makes ALJs, who make decisions with significant monetary and regulatory impact, more accountable to the political process – instead of being mere creatures of the bureaucratic blob.

It’s gratifying that the Supreme Court takes constitutional structure seriously, at least with respect to the president’s appointment of inferior officers. Justice Elena Kagan’s majority opinion powerfully and concisely explains what was clear all along: ALJs are powerful officers with significant discretionary powers rather than mere clerks. That power and discretion is what sets officers apart from mere employees, as the Supreme Court explained in Freytag v. Commissioner (1991). Accordingly, ALJs should indeed be part of the executive branch’s chain of command instead of a nebulous part of the “fourth branch” administrative agencies. This ruling will increase accountability for these executive officers even as they perform quasi-judicial tasks and often represent the last real chance for those caught in the SEC’s investigatory clutches to defend themselves.

I only wish, as the government argued, that the Court had addressed the removal power, which is the flip-side to appointments. Only Justice Stephen Breyer’s partial concurrence/partial dissent addressed that issue, whose resolution we’ll have to await in some future case.

This is where my half-vote allocations come in. The majority opinion was joined in full by six justices: John Roberts, Anthony Kennedy, Clarence Thomas, Samuel Alito, and Neil Gorsuch in addition to Kagan. Justice Sonia Sotomayor, joined by Justice Ruth Bader Ginsburg, dissented in full. That leaves Breyer, who agreed that SEC ALJs were improperly appointed but on statutory (Administrative Procedure Act) not constitutional grounds. Breyer was particularly concerned that combining the majority’s Lucia ruling with the holding in Free Enterprise Fund v. Public Company Accounting Oversight Board (2010) might require ALJs to be removable at will, throwing into doubt much of the administrative state’s legitimacy. (Breyer also disagreed with the majority’s remedy – in this, Justices Ginsburg and Sotomayor joined him – to vacate the ALJ’s order and reassign the case to a different ALJ even though the one who had ruled here had subsequently been re-appointed by the SEC itself.)

Well look, even (and especially) if Breyer’s fears about overturning the legally independent bureaucracy are valid, to me that’s a feature, not a bug. In any case, Lucia will go down as a case where the Court actually reads what the Constitution says and applies, regardless of what that might mean for efficiency of government.

Today, the Supreme Court handed the states a victory in their battle to collect taxes on online sales, but, in doing so, dealt a heavy loss to the national market, small businesses, and the people at large. South Dakota v. Wayfair’s focus was on whether to overturn Quill Corp. v. North Dakota, which held that states could not impose tax collection obligations on businesses with no physical presence in the state. In a bizarrely split 5-4 decision–with Justice Kennedy writing the majority joined by Thomas, Ginsburg, Alito, and Gorsuch and Chief Justice Roberts writing the dissent joined by Breyer, Sotomayor, and Kagan–the Court held that states can charge sales taxes on completely out-of-state businesses.

As the dissent rightly points out, the majority decided Wayfair with “an inexplicable sense of urgency,” asserting that “the passage of time is only increasing the need to take the extraordinary step of overruling” longstanding precedent. While wrongly decided cases need to be dealt with, Quill was not one of those decisions. As the chief justice correctly observes in his dissent: “E-commerce has grown into a significant and vibrant part of our national economy against the backdrop of established rules, including the physical-presence rule. Any alteration to those rules with the potential to disrupt the development of such a critical segment of the economy should be undertaken by Congress.” In fact, amicus briefs for various senators and members of Congress were submitted to the Court highlighting the ongoing efforts to fix the e-commerce sales-tax system, and three bills are currently pending. “By suddenly changing the ground rules,” the chief justice warns, “the Court may have waylaid Congress’s consideration of the issue. Armed with today’s decision, state officials can be expected to redirect their attention from working with Congress on a national solution, to securing new tax revenue from remote retailers.”

The majority in Wayfair mislabel Quill as some sort of decrepit roadblock to sensible internet jurisprudence, but the reality couldn’t be any more different. Quill was a safeguard that made states consider who they were taxing and why. Classic considerations like whether a taxpayer availed themselves of state services like fire and police were taken into consideration. Now that is thrown into disarray, as state lines mean less for the limits of state power.

Where e-commerce customers live does not change the fact that companies like Wayfair had no opportunity to vote in state elections or influence state policy. What the majority in Wayfair misses is that this is less a matter of petty tax avoidance than a question of the limits of state power. States were frustrated with the inability to collect taxes from out-of-state retailers under Quill, but governments around the world are prone to complain about the difficulties of collecting taxes. As we wrote in our amicus brief supporting Wayfair, “the Framers would not recognize the concern South Dakota poses: that interstate commerce is thriving to such an extent that collection of a particular type of tax has become difficult.”

While Quill was decided in the days when 28.8k modems beeped and hissed, the question of due process was no different. Due process requires some definite link between the state and any person, property, or transaction that a state seeks to tax or regulate. Wayfair does not own property in South Dakota, elects no representatives in South Dakota, and was afforded no protection by South Dakota’s police. The internet economy has blossomed and improved the lives of a great many, but it has not given rise to a great excuse to rewriting the Commerce Clause. Unfortunately, the Court missed the mark here by focusing far too much on whether and how states can collect revenue.

By removing the physical-presence requirement for charging state taxes on internet sales, the Supreme Court in South Dakota v. Wayfair has thrown this area of law into disarray. South Dakota’s tax kicks in at $100,000 or 200 transactions, but other states might set other thresholds or leave it unclear. Overturning bad precedent in and of itself isn’t bad – when old cases are really wrong and create unworkable legal regimes, they deserve to be overturned – but here the Court is saying that Quill is out of step with modern Commerce Clause precedents. That’s the wrong way to go: the Court should be conforming its jurisprudence to the original meaning of constitutional clauses, not conforming the Constitution to the times.

One other thing to note is that the justices’ voting alignment (Justice Kennedy writing the majority opinion, joined by Justices Thomas, Ginsburg, Alito, and Gorsuch, with the other four in dissent) was unusual, but not surprising in this particular case. This doctrinal area, what constitutional lawyers call the “dormant” Commerce Clause – that states can’t interfere with Congress’s implied non-regulation of interstate commerce – is the only one on which thus far I’ve found myself in disagreement with Justice Gorsuch’s views (and the only constitutional-structure area vis-a-vis Justice Thomas.)

My colleagues Trevor Burrus and Matt Larosiere will have more on this case later in the day.

President Donald Trump recently modified his policy of separating children from their families.  His new executive order requires the children of border crossers to be detained with their family members. Although a slight improvement over family separation, Trump’s decision raises different questions of whether detaining families together violates the 1997 Flores Settlement, whereby children have to be released after 20 days, which would necessitate family separation. The potential Flores problem could be mitigated entirely by Trump if he relied on alternatives to detention (ATD) programs instead of uniform detention of all border crossers. This would allow President Trump to claim that he ended catch and release without detaining migrant families at taxpayer cost.

Immigration and Customs Enforcement (ICE) manages ATDs to explore cost-effective means for asylum seekers and illegal immigrants to reside outside of detention facilities if they are not public safety threats. The ATDs help guarantee that the migrants show up at their hearings and ensure that they comply with court rulings. The 2017 budget allocated $114 million to ICE to run these programs and the Trump administration requested about $180 million for them for 2018.  

ATDs usually take at least one of three forms. The first is electronic monitoring devices whereby migrants have to wear a tracking device like an ankle bracelet. The second is assigning caseworkers to periodically check up on the migrants. The third is monetary incentives, such as bonds.  Many ATD programs mix these three. ICE runs the ATD program because they are responsible for apprehending, removing, and detaining immigrants inside of the United States. Detention costs about $170 per day for long stays and about $30 for short stays.  The proposed tent cities to house migrant children would have cost about $775 per person per night. As far as I can tell, about 100 percent of them comply with court orders as they are in government detention and therefore have no choice. The tradeoff for this extra effectiveness are the various costs of detention.

ATDs would have to be modified to accommodate recent border crossers, but that would not be difficult as the vast majority of them are not public safety threats. Asylum seekers, for example, have taken part in ATDs for over a decade. This post will explain the major ATDs, how they work, their costs, and effectiveness.

Intensive Supervision Appearance Program (ISAP)

This program started as a five-year pilot in 2004 and was for “immigrants in deportation proceedings who have been released from detention. The goal of the program is to avoid detention and allow immigrants to live with their families and continue working while their deportation proceedings are pending.” The second phase of ISAP began in 2010 and relied on electronic ankle monitors, telephone checkups that used biometric voice recognition software, unannounced home visits, employer verification, and in-person reporting to supervise participants. By February 2014, 95 percent of the participants in the ISAP II program were only monitored electronically. 

ISAP II data in 2012, the last year for which data is reliably available, showed that 17,524 people left the program. Of those, 4.9 percent absconded and 4 percent were arrested by other law enforcement agencies. The other 91.1 percent complied with their court orders and either left the country or earned some sort of legal status. Appearance rates at immigration courts were 99.6 percent.

Bonds

Bonds are common in many ATD programs and they function largely like bonds in the rest of the criminal justice system. They are only available to migrants who are not public safety threats. Just over 83 percent of those released on bonds showed up to their hearings in 2016. The median bond amount in immigration cases was $8000 in 2016. An appearance rate of 83 percent may not seem impressive, but this is costly for migrants who surrender their bond and a lot cheaper for the government.

Family Case Management Program 

The Family Case Management Program (FCMP) uses caseworkers to help migrants meet their legal and judicial obligations, such as reporting to ICE Enforcement and Removal Operations (ERO) check-ins, appearing at court hearings, and departing the United States when ordered by the courts. ICE began the program in 2015 and shut it down in mid-2017 despite some remarkable successes. About 99 percent of all migrants in the program made it to their ICE-ERO check-ins, 100 percent made it to their court appearances, and only 2 percent absconded into the black market after receiving removal orders.

Although this program was successful, it was also expensive.  The contract for the private prison contractor cost $17.5 million and there were only 954 participants, for a final price tag of over $18,000 per migrant. FCMP was also small and probably unsalable.  Its cost and small scale make this is an unlikely model for widespread use nationwide but it could be useful in special circumstances.

Community Management Programs

Community Management Programs are the non-profit versions of the FCMP. The Vera Institute of Justice had a contract with the old Immigration and Naturalization Service from 1997-2000 for migrants in removal proceedings through a program called the Appearance Assistance Program (AAP). During that time, 91 percent of the participants in the Vera AAP attended their required hearings and it cost 15 percent less, per capita, than detention throughout the court proceedings.  Parole and bonds cost 58 percent less but only 71 percent of them showed up to their hearings.  Over 78 percent of those in the Vera AAP program who were ordered removed complied with the program, including 100 percent of criminal aliens, 82 percent of asylum seekers, and 53 percent of illegal immigrant workers.

The Family Placement Alternatives run by the Lutheran Immigration and Refugee Services (LIRS) began accepting immigrants from ICE detention in June 2013. They achieved a 97 percent appearance rate in immigration court and only cost an average of $24 a day. The per-family cost of this is $50 per day according to a 2015 pilot program, much cheaper than the estimated detention cost of $798 per family.

The Catholic Charities of New Orleans worked with 39 asylum seekers released from detention and 64 indefinite detainees who could not be deported from 1999-2002. This was just one of the many Catholic Legal Immigration Network, Inc. clinics around the United States at the time. In the New Orleans program, the court appearance rate for participants was 97 percent and the program cost $1,430 per year per client. The cost and success of the programs vary considerably.

There are other private community management programs with similar success rates.

Conclusion

The Flores Settlement will limit the government’s ability to detain families indefinitely unless Congress changes the law—which they likely will not. To get around this problem, the Trump administration could expand the ISAP II program, increase bond issuances, and allow Community Management Programs to house and monitor migrant families with some sort of incentive/disincentive to make sure that the people they monitor show up to their hearings. Trump could also stop prosecuting every border crosser but that is too much to ask. If past experience is any guide, these ATD programs could ensure that 90 percent of immigration court orders are carried out. That is less than perfect compliance, but it is far cheaper, more humanitarian, and less of a political disaster for this administration.

Special thanks to Lourdes Bautista, Meagan Jacobs, Andrea Vacchiano, and Tim White for their research help.

Confirming rumors that had been circulating for weeks, the Trump administration announced that the United States will withdraw from the UN Human Rights Council. That body consists of 47 member states with rotating, staggered 3-year terms. It is tasked with protecting human rights as well as highlighting and condemning regimes that violate those rights. The Council has been controversial since its inception, especially among American conservatives. George W. Bush’s administration declined to make the United States a member when the UN General Assembly established the Council in 2006. President Obama reversed that decision in 2009.    

In announcing the U.S. withdrawal, Ambassador Nikki Haley blasted the organization as a “cesspool of political bias.” Vice President Mike Pence was equally caustic, stating that the United States was taking a stand “against some of the world’s worst human rights violators by withdrawing from the United Nations Human Rights Council. By elevating and protecting human rights violators and engaging in smear campaigns against democratic nations, the UNHRC makes a mockery of itself, its members, and the mission it was founded on. For years, the UNHRC has engaged in ever more virulent anti-American and anti-Israel invective and the days of U.S. participation are over.”

The decision has far more symbolic than substantive importance. For all of the publicity surrounding the UNHRC’s periodic condemnations of specific regimes, the body has no enforcement powers. Critics of Washington’s decision, though, see repudiating the UNHRC as another in a series of Trump administration moves to relinquish America’s “global leadership role” and retreat into an “America alone” foreign policy. They cite earlier examples such as Washington’s rejection of the Trans-Pacific Partnership (TPP), the withdrawal from the Paris agreement on climate change, and efforts to undermine the Iran nuclear agreement.

There are understandable reasons for the latest U.S. action, however. Haley correctly noted the offensive absurdity of having nations with horrific human-rights records as members of the UNHRC. But even her citation of such regimes opened the U.S. up to charges of hypocrisy. Her list of inappropriate members was heavily weighted with left-wing regimes hostile to Washington, including China, Cuba, the Democratic Republic of the Congo, and Venezuela. Notably missing from her indictment were such autocratic U.S. allies and notorious rights abusers as Saudi Arabia, Egypt, the Philippines, and Pakistan.

Such selectivity contributes to global cynicism about Washington’s ethics. So does the extreme emphasis on the UNHRC’s unfair treatment of Israel. The organization certainly is biased against that country, issuing numerous condemnations of its conduct in recent years and in 2017 describing Israel as the world’s worst human-rights violator. Given the records of such countries as North Korea, Cuba, and Saudi Arabia, that allegation is an groteque exaggeration.

However, the United States has shown a disturbing unwillingness to criticize any aspect of Israel’s policy, even its ongoing harsh treatment of Palestinians. Washington has refused to support, and often vetoes, UN resolutions criticizing Israeli conduct, even when most of America’s democratic allies are on board. That is an unhealthy, hypocritical stance, and using the UNHRC’s treatment of Israel as the primary reason for the decision to quit that body adds to a growing U.S. reputation for hypocrisy.

It also didn’t help matters that the announcement of Washington’s decision came just days after the Office of the UN’s High Commissioner for Human Rights condemned the Trump administration’s policy of separating the families of immigrants accused of illegal entry. The timing appeared to reflect a petty reaction to criticism.

Thus, while U.S. officials made a defensible policy change regarding a toothless, pretentious, and hypocritical UN agency, they could scarcely have done a worse job of managing the optics. The incident is yet another example of the Trump administration’s unduly clumsy handling of foreign affairs.

House Republicans will vote on their “compromise” immigration bill this week. Moderate Republican supporters of the bill may argue that its many restrictionist features—including draconian asylum provisions, cancelling the applications of 3 million people waiting to immigrate legally, and permanent reductions in legal immigration—are a small price to pay to help the entire Dreamer population gain a “pathway to citizenship.” However, an analysis of the Border Security and Immigration Reform Act (BSIF) shows that even under the most generous assumptions, the bill would likely initially legalize only 821,906 people, provide permanent residence (i.e. a pathway to citizenship) to 628,758, and result in citizenship for 421,268.

As provided in Table 1, only a third of the Dreamer population would likely receive status under the House plan (H.R. 6136), and just 18 percent would likely make it onto the pathway to citizenship. Only 12 percent would likely apply for and receive citizenship. Moreover, even the pathway to citizenship is tenuous, since—for all Dreamers in DACA or without legal status today—it is contingent on a future Congress appropriating money for a quite expensive (at least $25 billion) wall and security system along the Southwest border of the United States. 

Table 1: Dreamer Populations and Eligibility Under Border Security and Immigration Reform Act

Sources: Authors’ calculations (see below) based on population estimates from Migration Policy Institute (DACA eligible and total Dreamer Population based on American Hope Act); Border Security and Immigration Reform Act (H.R. 6136)
*As of December 31, 2016

If Congress wants to help a larger number of Dreamers, then it would need to establish clear legalization criteria with lower costs and fewer risks, while providing greater legal certainty for the parents of Dreamers to mitigate fears of coming forward. Members of Congress should not exaggerate the extent of the legalization of Dreamers as a way to justify politically questionable policy choices, including reducing the annual level of legal immigration and eliminating several current immigration categories.

Restrictive Criteria in the House Bill

Back in January, President Trump promised a pathway to citizenship for Dreamers—up to 1.8 million of them. That’s still just half of the 3.6 million Dreamers—unauthorized immigrants who entered the country as minors—estimated by the Migration Policy Institute (MPI) to be in the United States as of January 1, 2017, but it’s still far more than the estimated number of Dreamers who will likely receive permanent residence under the House compromise legislation that will receive a vote this week.

The BSIF Act creates a four-part framework for potentially receiving permanent residence—a “path to citizenship”—and later citizenship (see Table 2 at the end). First, Dreamers would need to meet a set of basic criteria to receive conditional nonimmigrant status, a temporary renewable legal status. Second, after six years, most would need to apply for a renewal of this status. Third, they could apply for permanent residence over a 15-year period if they met a final set of requirements. Fourth, they could apply for citizenship five years after receiving permanent residence. Each stage will reduce the population that ultimately will become U.S. citizens.

The House immigration bill would use the same restrictive basic criteria as the Deferred Action for Childhood Arrivals (DACA) program. Its authors argue that if the requirements were good enough for President Obama who created DACA in 2012, they should be good enough for Democrats today. But as an act of prosecutorial discretion, DACA was never meant to be permanent immigration law, and in any case, President Obama tried to update its eligibility requirements in 2015, only to be stopped by the courts. The bill wouldn’t stop there. The House plan imposes additional eligibility requirements that would exclude even more Dreamers from receiving permanent protection.

The House bill will exclude Dreamers who entered after June 15, 2007, who entered at any age over 15, or who were over the age of 31 on June 15, 2017 (or 37 today). By the time the bill is implemented, people who had been residing in the United States for 10 or 11 years would be excluded from receiving status under the bill. The bill also requires a high school degree or equivalent or high school enrollment if the applicant is younger than 18. These restrictions were also in DACA, but the new bill would go even further to restrict eligibility. An applicant would be disqualified for having more than a single non-traffic-related misdemeanor, including immigration-related offenses; ever having missed an immigration court appearance; or having ignored an order to leave the country.

The biggest new restriction would be the requirement that Dreamers who are not students, disabled, or primary caregivers demonstrate that they can maintain an income of at least 125 percent of the poverty line. Not only do many Dreamers have incomes beneath this threshold, but also, if they have already lost DACA or never applied, it will be impossible for them to receive a legal job offer or demonstrate legal employment for the purposes of their application. This creates a catch-22 for applicants: prove you can support yourself in order to get work authorization in order to support yourself. (This provision should also concern employers which could see their records become the focus of government attention.)

In addition, receiving status under this bill will be far more expensive than receiving status under DACA. The bill would impose a fine—what the bill refers to as a border security fee—of $1,000. In addition, applicants would need to pay a fee to cover the cost of their application. DACA also had an application fee of $495, but the fee under this new bill would likely be more than double that because it requires an in-person interview and a medical examination. This will make the legalization more like applying for permanent residence, which costs $1,225. All told, applicants would need to pay about $2,225—4.5 times as much as DACA. This comes on top of any attorney fees. Many DACA applicants cite the cost as a primary challenge. MPI’s analysis also points to income as “strongly affecting” Dreamers’ ability to apply.

Finally, the bill would impose a 1-year filing deadline. This means that applicants would have just one year to gather their information, find an attorney, and save $2,225 to apply. For comparison, only 64 percent of DACA applicants submitted applications in the first 13 months of the program. This time limit will needlessly suppress applications.

Why Relatively Few Dreamers Would Even Receive Temporary Relief

In January 2018, the Migration Policy Institute used the Census Bureau’s American Community Survey to estimate that there were 1.3 million Dreamers eligible for DACA. Another 120,000 were too young to apply for DACA, but would be eligible under this legislation so long as they were enrolled in school. However, this eligible population must be reduced based on the new requirements. We estimate conservatively that the income threshold would exclude about 15 percent of the DACA eligible population. This figure is based on the share of Central American immigrants who entered between 1982 and 2007 who are below 125 percent of the poverty line, are not in school, and are not unable to work due to disability or being the primary caregiver, as recorded in the 2017 Current Population Survey.

The misdemeanor requirement is more difficult to place a precise number to, but the government says that 17,079 DACA recipients have at least two arrests, assuming that 75 percent of those arrests ended in conviction. That would reduce 12,809, or 2 percent of the DACA recipient population. Assuming that this rate would apply to the DACA eligible population as a whole (even though it is more likely that that population has more convictions that the DACA population itself), this would reduce the eligible population by another 26,000. Thus, the maximum number of Dreamers initially eligible for status under the House bill is 1.17 million. Even this is likely an overestimate because we cannot estimate how much the noncriminal restrictions (e.g. prior removal orders, false claims of U.S. citizenship, etc.) could further reduce the eligible population.

Even fewer will actually apply. Even after six years of DACA, only 61.4 percent of the eligible population applied for and received DACA. While the promise of a pathway to citizenship could result in a higher participation rate, other elements in this bill will suppress application rates, neutralizing the greater incentives to apply. Furthermore, the initial status is temporary, and the pathway to citizenship is not guaranteed. In fact, unless Congress funds the border wall repeatedly in future years, the path to citizenship would never materialize at all. Moreover, the fact that the cost will be about 450 percent higher will prevent many Dreamers from applying (as noted above).

Many Dreamers failed to apply for DACA because they didn’t realize that they were eligible, believing that they had to have finished high school or that those who had been ordered to leave the country could not sign up. This bill’s new and more complex eligibility requirements will only introduce more confusion. The risk of a denial may keep some from taking the risk to apply. Nearly 8 percent of applicants for DACA were rejected.

The uncertainty and distrust associated with the Trump administration’s enforcement actions would only add to the concern about handing over information. As we’ve noted before, many Dreamers expressed concern that their application could be used to target their families. The House bill attempts to address this fear by limiting how their application information can be used, but it amplifies the fear in other areas by providing enforcement resources and new legal authorities to the administration to speed up deportations. A future Congress could change this privacy protection at any time, and at this point, few immigrants may trust the administration to follow this type of technical “firewall.”

According to the Congressional Budget Office (CBO), the last major legalization—the 1986 amnesty—had only a two-thirds participation rate, despite the less strict criteria than the ones contained in BSIF. Ultimately, we conservatively chose to use the CBO’s higher rate of 67 percent, rounding it up to 70 percent—10 percentage points higher than DACA’s initial enrollment rate. Based on this analysis, we can conclude that at most 820,000 Dreamers would receive initial legal status under the House GOP proposal.

Why Relatively Few Dreamers Would Receive Permanent Residence & Citizenship

Under DACA, which had no additional requirements at all to extend status other than maintaining residence in the United States for another two years, just 85 percent of initial enrollees maintained status through the end of the program. Some of this drop-off can be explained by people failing to graduate high school for a variety of reasons, but the additional cost is important as well. Under the House bill, applicants for extension of their temporary status would be required to pay a fee of another $1,225 fee (2.5 times more than DACA) and have stayed in the United States for another 6 years. Assuming this rate remains roughly the same, only 698,620 would likely end up receiving an extension under the House bill.

After receiving the extension, Dreamers—as well as some legal immigrant Dreamers*—would be able to apply for a pathway to permanent residence. The bill creates a complex points system that will prioritize applications from those with more education, longer work histories, or better language skills. But the minimum threshold for points is low enough that anyone who qualified for the initial status would be eligible to apply. Of course, there is not a strong incentive even to apply for this status, and the cost of applying for permanent residence is another $1,225. They would have to apply over the course of a 15-year period, starting five years after the initially received status. We assume that about 90 percent would apply for permanent residence. Thus, only 628,758 Dreamers would likely receive permanent residence—a path to citizenship—under the House proposal.

Finally, only about two thirds of those who receive permanent residence are likely to apply for citizenship. While Dreamers are probably more likely to apply for citizenship than other immigrants, immigrants from Mexico and Central America are much less likely to apply for citizenship than immigrants from other countries—all have naturalization rates below 50 percent—and 89 percent of DACA recipients are from Central America or Mexico. These two facts work in opposite directions, leading us to assume that Dreamers will naturalize at the average rate for all immigrants—67 percent. Based on this assumption, just 421,268 immigrants are likely to become U.S. citizens under the House compromise bill.

Conclusion

In the best case scenario, the House GOP plan would likely provide a pathway to citizenship to fewer than 630,000 Dreamers—barely a third of the president’s promise in January and just 18 percent of the entire Dreamer population. Moreover, only an estimated 421,000 immigrants are likely to become citizens.

If Congress wants to fulfill the president’s promise of a pathway to citizenship for 1.8 million Dreamers, it would need to institute a broader legalization program for Dreamers with as few risks and costs, and as little confusion, as possible. Congress would also need to provide legal certainty in some form for their parents to mitigate fear of coming forward. Members of Congress should also not exaggerate the extent of the legalization of Dreamers as part of a strategy to justify questionable policy choices, including reducing legal immigration and eliminating several immigration categories.

Table 2 compares the eligibility criteria and requirements under the BSIF Act to those under DACA and the Securing America’s Future (SAF) Act, which is the other bill under consideration this week.

Table 2: Comparison of Pathways to Status & Citizenship Under House Bills and DACA

*The legal immigrant Dreamers would slightly increase the eligible population, but there are so few who would meet the requirements (10 years of continuous residency before the bill passes plus 5 or 6 more after it is implemented) that it would not substantially alter these numbers. In any case, the estimates of the Dreamer population from MPI could include people in temporary statuses that have characteristics similar to those without status (inability to access welfare or receive certifications for legal employment).

As I noted yesterday, the Supreme Court has decided the Wisconsin gerrymandering case of Gill v. Whitford on standing grounds, without reaching the main constitutional issues: the case returns to lower courts for a chance to repair the standing issue with most or all of its central contentions intact. Much the same can be said of the Maryland claims in Benisek v. Lamone, where timing as opposed to standing was the issue.

Along the way, however, Chief Justice Roberts in his opinion for a unanimous Court in Gill paused to linger over one argument that had been raised along the way. This is the argument that the Court must act because political branches have failed to address some serious problem which as a result can be fixed by no institution other than the Court. The Gill Court takes sharp issue with this argument:  

At argument on appeal in this case, counsel for the plaintiffs argued that this Court can address the problem of partisan gerrymandering because it must: The Court should exercise its power here because it is the “only institution in the United States” capable of “solv[ing] this problem.”   Such invitations must be answered with care. “Failure of political will does not justify unconstitutional remedies.”   Our power as judges to “say what the law is” rests not on the default of politically accountable officers, but is instead grounded in and limited by the necessity of resolving, according to legal principles, a plaintiff’s particular claim of legal right.

In short, the Constitution empowers the Court to vindicate the sound legal claims of particular plaintiffs, not to step into the role of other branches that are not doing their jobs well. Note that the decision was unanimous: not a single Justice backs the notion that other branches’ irresponsible failure to act on some problem can, by itself and without more, make it legitimate for courts to step in. 

Since there remains some uncertainty on this point in some quarters of the commentariat, it’s good to hear unanimously voiced guidance from the Justices themselves.  

 

The Trump administration has released its final rule expanding so-called association health plans. The rule would allow many consumers to avoid some of ObamaCare’s unwanted regulatory costs. But the rule also highlights both the destructive power of ObamaCare and Republicans’ utter lack of imagination when it comes to health care.

Association health plans allow small businesses to claim the same federal exemption from insurance regulation that large businesses have traditionally (if unwisely) enjoyed. Small businesses have long wanted that exemption so they could escape oppressive state regulation. Now, they want it so they can escape oppressive federal regulation—i.e., ObamaCare. The consulting firm Avalere estimates the ability to avoid some of ObamaCare’s unwanted regulatory costs would induce 3.2 million people to enroll in association health plans and reduce their premiums:

Premiums in the new AHPs are projected to be approximately $2,900 a year lower compared to the small group market and $9,700 a year less compared to the individual market.

By Grabthar’s hammer, what a savings!

Even so, association health plans have always been a terrible idea that violates Republicans’ federalist principles, because they move health-insurance regulation from the state level to the federal level. But in an ironic twist, while many Republicans obsessed over health care ideas that run counter to their principles, ObamaCare just went ahead and federalized regulation of small-business health plans. So now that the federal government is (over-)regulating small-business health plans, extending that exemption to association health plans…no longer violates federalism. Credit ObamaCare with making this bad idea seem good.

The emphasis is on “seem.” Association health plans still aren’t a good an idea. Rather than offer an agenda to make health care better, more affordable, and more secure, Trump’s association health plans rule builds on the broken model of employer-sponsored health insurance. Employer-sponsored coverage is lousy coverage. It deprives workers of control of their health-insurance dollars and decisions. It sticks millions of workers with health plans they would never choose themselves. It leaves millions of workers with uninsurable preexisting conditions, because it disappears for no good reason after workers get sick. It increases prices for health care and health insurance. The failures of our government-created system of employer-sponsored coverage are what created the demand for ObamaCare in the first place. Trump’s association health plans rule works entirely within that framework. It does nothing to move Americans toward a better system of providing health insurance.

But it would allow some people to avoid some unwanted regulatory costs. So there’s that.

And that part gives rise to the only other good part of this rule, which is also the part that ObamaCare supporters hate the most: the association health plans rule will make ObamaCare’s costs more transparent. The rule will free an estimated 1 million disproportionately healthy people to escape the unwanted regulatory costs ObamaCare imposes on them in the individual market for health insurance (i.e., the Exchanges). ObamaCare imposes its highest hidden taxes, in the form of higher premiums, on the healthy. When those folks drop out of the Exchanges, the average risk in ObamaCare’s risk pools will rise. Correspondingly, ObamaCare premiums will rise, perhaps even faster than they have been

ObamaCare supporters decry this as “sabotage,” but that is a subterfuge. When ObamaCare premiums rise to reflect the cost of ObamaCare’s regulations, it is what the world calls transparency. ObamaCare supporters fear such transparency because, as ObamaCare architect Jonathan Gruber admitted, the public would have rejected the law (and still might!) if they could actually see what it does. “[If] you made explicit that healthy people pay in and sick people get money,” Gruber gloated, “it would not have passed.” And if you reach the point where you decry transparency as sabotage, it may be time to reevaluate your life. 

On page 5 of my Wall Street Journal this morning, and page 7 of my Washington Post, a full-page ad for Wells Fargo banners

Wells Fargo and NextEra Energy join together to fuel low-carbon economy throughout the U.S. 

Meanwhile, the front page of my Journal announces

Green-Power King Thrives on Government Subsidies

The article explains that NextEra Energy

has grown into a green Goliath, almost entirely under the radar, not through taking on heavy debt to expand or by touting its greenness, but by relentlessly capitalizing on government support for renewable energy, in particular the tax subsidies that help finance wind and solar projects around the country. It then sells the output to utilities, many of which must procure power from green sources to meet state mandates.

And also:

While environmentalists applaud NextEra’s commitment to building wind and solar farms outside Florida, they have criticized what they see as its attempts to slow the deployment of rooftop solar inside Florida where it would directly compete with its utility business.

As Wells Fargo tries to rescue its reputation after its account scandals, maybe it should forgo bragging about helping a company get heavy subsidies in order to sell its products to compelled buyers. Maybe as part of its apology and restitution, it should swear off participating in taxpayer-subsidized projects, as BB&T in 2006 vowed not to lend to projects that relied on eminent domain.

Would NextEra even be profitable without all these subsidies and mandates? At least it’s not Solyndra, the Obama-connected solar power company that left the taxpayers holding the bag for $500 million when it collapsed. (“Obama’s green-technology program was infused with politics at every level, The Washington Post found in an analysis of thousands of memos, company records and internal ­e-mails. Political considerations were raised repeatedly by company investors, Energy Department bureaucrats and White House officials.”)

Maybe we should drop all these subsidies, restrictions, mandates, and trade barriers and let the free market deliver the right mix of energy at the lowest cost.

President Trump set off another round of Twitter hyperventilation and financial market selling these past 18 hours with his latest threat to assess duties on another $200 billion of Chinese imports. What to make of this?

I see two (and only two) ways of looking at this. You can conclude that Trump is irrational, engaging in rhetoric and taking actions that are inconsistent with his goals, or you can see him as rational. You may not like his goals, but that doesn’t make him irrational.  And he may be rational, but that doesn’t mean he’s not misguided.  It seems to me, though, that if you think Trump’s irrational, then there’s not much use in trying to make heads or tails of the daily gyrations. There’s no basis, really, for offering much in the way of useful analysis of U.S. trade policy for the next couple of years.

I see Trump as rational, but deeply misguided. His unpredictability is risky and frustrating, but it’s also a staple of his governance. Unpredictability is the most predictable feature of this administration. But Trump’s goal is consistent and predictable.  Trump’s goal is to cut deals that make him look Herculaean. The deals he most covets are those that cast him as fixing the trade problem with China and fixing the “worst trade deal ever negotiated,” NAFTA.

From the outset, Trump set his sights on “fixing” the U.S. bilateral trade deficit with China.  Is that a worthwhile priority of trade policy?  Absolutely not. But Trump is convinced that reducing the deficit is priority number one.  He sees his high stakes engagement as worthwhile because he miscalculates the potential benefits and costs of his approach. I see the upside of Trump’s approach as offering potentially smallish benefits (getting China to do something that may benefit U.S. exporters), but the downside (a deleterious trade war that leaves the world in far worse shape) as severe and significant. My own approach would be far more risk-averse.

Trump wants the Chinese to buy more American goods and services.  On its face, this is a reasonable desire for a U.S. president to have.  But Trump wants the Chinese government to commit to purchasing more U.S. goods and services, somewhere in the neighborhood of $100 billion to $200 billion per year (which, of course, reinforces the fact that China’s economy is centrally directed, which is the basis for the legitimate problems in the economic relationship in the first place.) Threatened tariffs of 25 percent on $50 billion of imports from China, announced as result of a U.S. investigation into Chinese technology and IP practices, are Trump’s initial leverage in getting the Chinese to commit to more purchases. Beijing’s announced retaliation slightly negates that leverage, but then the administration cracked down on ZTE, the Chinese information and communications technology company that admittedly violated U.S. export control laws by selling certain products to Iran and North Korea, and was cut off from U.S. suppliers of semiconductors and other critical components.

The on-again-off-again-on-again sanctions seem to be conditioned on whether and to what extent Beijing commits to purchasing U.S. exports, and that decision now seems to be conditioned upon Trump granting a reprieve to ZTE. Trump has already given ZTE a reprieve on paper (with certain conditions and requirements), but Congress seems to have strenuous objections, and is considering an amendment to the defense authorization bill to prevent Trump’s reprieve from taking effect.

Trump’s latest threat to hit another $200 billion of Chinese products with tariffs is just as much a threat to Congress as it is to China.  Either the Chinese will relent and agree to purchase U.S. stuff (without need of reinstating ZTE) and the tariffs will be called off or Congress, fearing (more than Beijing does) a trade war that will take down U.S. manufacturing and agricultural interests and their representative in Washington, will relent on its legislative push to block ZTE.  Of course, relenting on ZTE while continuing to treat Canada, Mexico, the EU and other allies as national security threats (especially since that designation has resulted in those countries applying tariffs to U.S. agricultural and manfuacturing exports, too) isn’t going to sit well with Congress either. 

So, in order to fix these asymmetries and make Congress and U.S. allies whole (wholer, whole-ish): Congress abandons its legislation to block ZTE, which gets back in business (with conditions); the U.S.-China tariff war is called off; China signs purchasing orders for $100 billion to $200 billion of U.S. exports; the steel and aluminum tariffs on Canada, Mexico, and the EU are removed; and the NAFTA negotiations are restarted and concluded before the midterms. This gives Trump two major pyrrhic victories that will reinforce his greatness to his base.

Seems to me these are the only outcomes that could remotely explain (if not justify) the ride Trump is taking us on. I see it as misguided, but not irrational.

The United States Citizenship and Immigration Services (USCIS) released a report showing that 59,786 DACA-recipients, or about 7.8 percent of the 770,628 people who earned DACA, have been arrested since the program’s creation in 2012.  The report does not indicate convictions, only arrests.  Even worse, the report does not provide the comparable arrest rate for other populations, giving the false impression that that is a high number of arrests for such a small population.  However, some data released in the report does allow for a back of the envelope comparison between the DACA-arrest rate and the arrest rate for the non-DACA population.  The per capita arrest rate of DACA recipients is 46 percent below the non-DACA resident population.  Controlling for age, the arrest rate for DACA-kids is 63 percent below that of the non-DACA resident population.

USCIS’ report states that 7.8 percent of DACA recipients were arrested from 2012 through the first part of 2018.  The government does not record the number of people arrested elsewhere so I cannot compare the arrest rate of the population at large with the arrest rate of DACA-recipients.  However, the Bureau of Justice Statistics does record the number of arrests made per year and the USCIS report lists the number of arrests (there is a major difference between the number of arrests and the number of people arrested). 

The 59,789 DACA-recipients were arrested 88,478 times.  During the same time, there were about 67.6 million arrests of people who were not in DACA.  The number of arrests of DACA-recipients over the entire period is equal to about 11.5 percent of the entire population approved for the program.  However, the number of arrests nationwide of non-DACA recipients is equal to about 21.2 percent of the non-DACA resident population.  By this measure, there are about 46 percent fewer arrests per DACA-recipient than among non-DACA recipients.  Subtracting out immigration offenses from the DACA-recipients lowers their arrest rate to 10 percent, less than half of the non-DACA population.

Controlling for age gives an even more wildly disproportionate answer.  DACA recipients are aged 37 and below so that population is more likely to be arrested than others.  Keeping their arrest rate the same at 11.5 percent but adjusting the non-DACA population arrest rate for those aged 37 and younger to 31.4 percent means that non-DACA residents have an arrest rate about 2.7 times as great as the DACA arrest rate. 

There are many different ways to slice and dice these numbers.  Substituting different denominators for the average number of DACA recipients per year to the average U.S. resident population gives a similar arrest ratio.  USCIS points to even better results than our research on DACA criminality.  This might not be what they intended but the USCIS report shows that DACA-recipients are much less likely to be arrested than the rest of the resident U.S. population.   

On Twitter last week Stephen Williamson wrote that he was “puzzled by the infatuation with NGDP targeting. We have good reasons to care about the path for the price level and the path for real GDP. Idea seems to be that if you smooth Py that you get optimal paths for P and y. That’s hardly obvious, and doesn’t fall out of any serious theory I’m aware of.”

I’m not exactly sure what Stephen means by a “serious theory.” But if he means coherent and thoughtful theoretical arguments by well-respected (and presumably “serious”) economists, then there are all sorts of “serious theories” out there to which he might refer, with roots tracing back to the heyday of classical economics. Indeed, until the advent of the Keynesian revolution, a stable nominal GDP ideal, or something close to it, was at least as popular among highly-regarded economists as that of a stable output price level, its chief rival.

If one of today’s outstanding monetary economists isn’t familiar with these writings, it’s a good bet that many other economists don’t know about them either. So I thought it worthwhile to list here some important theoretical works favoring nominal GDP targeting over inflation or price-level targeting, in chronological order, with brief remarks concerning each, and links to those that can be read online. Those interested in a more complete survey of the relevant literature, albeit one written not quite a quarter-century ago, are encouraged to have a look at my 1995 History of Political Economy article, “The ‘Productivity Norm’ versus Zero Inflation in the History of Economic Thought.”

Astute readers will note that the works I list are ones that compare the fundamental welfare effects of stable aggregate spending to those of other monetary policy objectives. They do more, in other words, than merely suggest that nominal GDP may be a useful intermediate policy target than, say, some monetary aggregate. The articles also reject absolute stability of the price level, real output, or both as “given” policy ideals. In contrast, some other writings favoring nominal GDP targeting  (e.g. McCallum 1987Hall and Mankiw 1994, or Frankel and Chinn 1995) do so because it does a reasonably good job at stabilizing P or y or some weighted average of the two. These writings seem to me to miss the crucial point that output and price level fluctuations are themselves sometimes optimal, and that NGDP targeting is in turn desirable precisely because it allows such optimal fluctuations in y and P to occur. Those critics of NGDP targeting (e.g., George Kahn and Andrew Levin) who fault it for failing to stabilize P and y, as well as some alternative policies, likewise miss the mark. To all of these writers I especially commend the works listed here.

Finally, I leave out works by Scott Sumner, David Beckworth, and other well-known Market Monetarists, because part of my aim is to show my fellow monetary economists that Market Monetarism is but one particular, recent manifestation of a perspective that has had many distinguished adherents, representing numerous different schools of thought, throughout the long history of our discipline.

***

1837: Samuel Bailey, Money and Its Vicissitudes in Value

A splendid, early tour de force. Bailey may have been the first economist to distinguish between changes in the value of money (and, hence, the general level of prices) “originating on the side of money” and ones “originating on the side of goods” — where by the latter he means changes reflecting innovations to the “facility of supplying” goods, including “the discovery of shorter and more economical processes in the arts, and invention of machinery, [and] the abolition of monopolies and taxes.” Today’s economies make essentially the same distinction when they trace price-level changes to either “aggregate demand” or “aggregate supply” innovations. Using this distinction, Bailey goes on to show that, unlike price level changes originating on the “money” side, those originating on the “goods” side neither distort nominal (“pecuniary”) contracts nor (in the case of downward price movements) discourage industry as a whole.

1918-1933: Debate in the Ekonomisk Tidskrift

In a series of articles in the Ekonomisk Tidskrift, Stockholm School economist David Davidson took his compatriot, the great Knut Wicksell, to task for identifying a neutral (hence ideal) monetary policy with one that achieved a perfectly stable general price level. Davidson instead insisted that a neutral policy would allow the price level to vary with aggregate supply (and, particularly, productivity) innovations. Among other prominent Stockholm-School economists, Eric Lindahl and Gunnar Myrdal (see below), sided with Davidson in this debate, while Gustave Cassel sided with Wicksell. Regrettably, Davidson’s works haven’t been translated into English. But those who don’t read Swedish may consult excellent reviews of the debate by Brinley Thomas and Claes-Henric Siven. According to Thomas, “There can be little doubt that the honours in this contest went to Davidson.” A recent paper by Gunner Örn, also (alas) in Swedish, points out the practical equivalence between Davidson’s norm and recent proposals for targeting nominal GDP. “These two Swedish economists,” he writes (referring to Davidson and Lindahl), “were very early — perhaps even the world’s very first — advocates of what in today’s economics debate is called ‘nominal GDP targeting’.”

1930: Ralph G. Hawtrey, “Money and Index-Numbers

If this essay were all Hawtrey ever wrote on monetary theory, Scott Sumner might still have had reason for wanting his chair at Mercatus to be called “The Ralph  G. Hawtrey Chair of Monetary Policy.” For no-one has ever made the case for preferring a stable level of nominal income (or what Hawtrey refers to as “consumers’ income and outlay”) to a stable price level more clearly and painstakingly than Hawtrey makes it here. The only disturbances to prices that monetary policy should seek to avoid, Hawtrey concludes, are those “affecting the amount of the consumers’ income and outlay otherwise than in proportion to the factors of production.” Spot on, Ralphie boy!

1935: F.A. Hayek, Prices and Production, 2nd. ed.

Let’s be clear: my concern here is with writers who made compelling theoretical arguments for NGDP targeting, or something very close to it, regardless of whether they believed the theory could be put into practice. By this criterion, Hayek must be judged one of the more important historical precursors of Market Monetarism. Although Hayek had been critical of arguments and schemes for stabilizing the general price level for some years before he wrote Prices and Production, it was only in that work, and particularly in it’s 2nd edition, and in several subsequent writings, that he acknowledged the desirability of such money-stock changes as would serve to insulate the price level from velocity (but not real output) shocks. For further details, and a comparison of Hayek’s views on this issue with Keynes’s, see my 1999 HOPE article. Regular Alt-M contributor Larry White has written a good, sympathetic review of Hayek’s monetary thought. Rather less sympathetic is a blog post by “Lord Keynes” pointing out differences between Hayek’s stable MV ideal and his practical policy recommendations during the Great Depression.

1937: Allen G. B. Fisher, “Does an Increase in Volume of Production Call for a Corresponding Increase in Volume of Money?

Unlike his better-known American namesake, this notable New Zealand economist denied that a stable price level was always desirable. Instead he insisted that, “Apart from increases in population and from changes in the desire of individuals to hold money, economic development which takes the form of increased production per head…does not require any increase in money supply.” In other words, he favored an NGDP target with the target growth rate of NGDP set equal to the population growth rate. It is not falling prices per se but generally falling money incomes, Fisher argued, that “have a depressing effect upon business enterprise” because they disappoint “expectations of normal profit.” A decline in prices reflecting increased productive efficiency is, on the other hand, not only not harmful, but desirable, because attempts to prevent them is likely temporarily to distort profit signals, delaying desirable transfers of scarce resources among different efficient industries. Highly recommended.

1939: Gunnar Myrdal, Monetary Equilibrium

Many people know that Hayek and Myrdal shared the 1974 “Nobel” prize “for their pioneering work in the theory of money and economic fluctuations” (among other things). But relatively few have read Myrdal’s main work on monetary theory, and even fewer realize that it was originally published, in German, for a 1933 volume that Hayek edited. Least well known of all is the fact that Hayek didn’t think much of Myrdal’s analysis at the time, and that he accepted it only as a last-minute substitute for one that Eric Lindahl was supposed to prepare. For that and other (mainly ideological) reasons there was no shortage of bad blood between the two men when they crossed paths again in Stockholm. Still, nothing could excuse Myrdal’s boorish behavior both during and after the event.

Having gotten all that off my chest, the fact remains that, whatever its flaws, Myrdal’s essay is well worth reading. Among other points, Myrdal argues — convincingly, I think — that “If one desires the greatest possible diminution of the business cycle, but at the same time wants a guarantee against too great, and especially unidirectional, price movements, which naturally affect distribution most severely, then one must try to stabilize an index of those prices which are sticky in themselves. This would often lead in practice to a stabilization of wages.” In this regard Myrdal’s argument anticipates some more recent New Keynesian arguments favoring a stable NGDP growth trend over a stable price level or inflation rate.

1963: Dennis Robertson. A Memorandum Submitted to the Canadian Royal Commission on Banking and Finance

For better or worse (the last, if you ask me), Keynes’s General Theory made a clean sweep of the field of monetary economics, brushing aside competing works, including the insightful contributions of Keynes’ s Cambridge colleague. Robertson’s popularity thereafter was largely sustained by his splendid little handbook on Money, first published in 1922 and revised and reprinted many times thereafter. That’s a shame, because Robertson’s less popular works on the same subject are full of brilliant insights, including some exposing fundamental errors in Keynes’s, if not in Keynesian, monetary theory.

Robertson’s “Memorandum,” which he completed in 1962 but which was not published until a month after his death in 1963, was his last important work on monetary economics. In it he asks “how a Monetary Authority should behave in a country which was isolated from the rest of the world, and in which it was desired so far as possible to leave the pace of capital formation to be determined by the unfettered interplay of the decisions of private enterprisers and savers.” His answer is that the authority’s aim should be to stabilize, not the general price level, but the economy’s “money flow,” meaning “the flow of monetary demand for final output.” Doing so, he argues, would better “enable the participants in the growth process — enterprisers, savers and hired workers — to realize their intentions with a minimum of friction and of distortion of the true significance of the monetary contracts which they are making with one another.”

1983: Charles Bean,  Targeting Nominal Income: An Appraisal

The monetarist counterrevolution, with its emphasis on targeting monetary aggregates, ultimately helped to inspire a new round of arguments for targeting nominal income, with contributions by James Meade (in his 1977 Nobel address), James Tobin, and Sam Brittan. Bean’s assessment of them is highly analytical, and in that respect at least especially “serious.” He concludes

that a policy of targeting nominal income is an optimal response to demand shocks and to productivity shocks if labour supply is inelastic. Even if labour supply is elastic nominal income targets will still produce a better response to productivity shocks than monetary targets if the price elasticity of aggregate demand is less than unity. Growth rules are less attractive than targets for the level of nominal income.

Given the quality of this early performance, it’s a shame that Bean chose to follow it up more recently with a far less compelling speech pooh-poohing recent arguments for targeting nominal GDP as so much “old wine in a new bottle,”  and otherwise attempting to suggest that, had it been pursued during the crisis, such targeting would not really have improved much on the U.K.’s inflation targeting regime. Why “less compelling”? Here’s an example: Bean at one point argues that, because “the financial crisis has led to a fall, possibly temporarily, in the underlying rate of growth of supply,” a given or “fixed” nominal income target would have gone “hand-in-hand with a higher inflation rate, whereas a fixed inflation target would [have been] associated with lower nominal income growth.” Quite correct; and had Bean stopped there he’d surely have been compelled to conclude, as he had in 1983, that NGDP targeting would have been the better option. But instead of doing so he continues: “But this hardly provides an argument in favour of a nominal income growth target. Indeed, in this case one would surely want to set the target growth rate for nominal income lower to reflect the lower rate of growth of supply, though by how much might be hard to judge.”

Huh? What? Here we see the dangers lurking in any comparison of alternative monetary policy norms that assumes (as Bean’s does here) that deviations from some target inflation rate belong in the monetary authority’s “loss function.” The whole point of NGDP targeting is that it allows supply-side developments, and adverse ones especially, to be reflected in higher prices or (in the case of a drop in the growth rate of productivity) a higher inflation rate. A central bank that sets a target for NGDP growth only to revise it in response to supply innovations so as to maintain a constant inflation rate is targeting inflation, not NGDP.

1989: Michael Bradley and Dennis Jansen, “Understanding Nominal GNP Targeting

Short, simple, and sweet: the framework is good old aggregate supply and demand, with diagrams and all. For a bonus, there’s a nice discussion of Ben McCallum’s NGDP Rule. Read this before you try to work your way through either Bean’s 1983 article or the New Keynesian works listed further on.

1992: William Niskanen, “Political Guidance on Monetary Policy

Although he’s mainly known for his contributions to the theory of bureaucracy, and to public choice theory more generally, Bill Niskanen, Cato’s long-time chairman, was an all-round original thinker. Nor did he neglect monetary economics, where his thinking led him straight into the nominal-spending stability fold. Like Robert Gordon before him, Niskanen differed from today’s Market Monetarists mainly in preferring a nominal “final sales to domestic purchasers” target to a nominal GDP target. (On the pros and cons of these alternatives, see this excellent Bill Woolsey post.)

2005: Jinill Kim and Dale Henderson, “Inflation Targeting and Nominal-Income-Growth Targeting: When and Why Are They Suboptimal?

Using “a model of a closed economy with optimizing firms and households, monopolistic competition in both product and labor markets, and one-period nominal contracts,” Kim and Henderson “derive optimal monetary stabilization rules and compare them to simple rules under both full and partial information.” Importantly, by “optimal rules” they mean, not simply ones that minimize an ad-hoc central bank “loss function,” but ones that “maximize the unconditional expected utility of the representative agent.” They find that, while none of the simple rules quite match up to the optimal rule, among them “nominal-income-growth targeting dominates inflation targeting for plausible parameter values.” They also find, not surprisingly, that “the more important are productivity shocks…the greater the advantage of nominal-income-growth targeting over inflation targeting.” There’s nothing new in these particular conclusions, which (as we’ve seen) many previous economists arrived at with relatively little algebra, or with no algebra at all. Still, formal models like this one may prove essential to winning  over those NGDP targeting doubting Thomas’s who believe nothing until they see it drop out of a fully-articulated macro model.[1]

2010: Evan Koenig, “The Case for Nominal Income Targeting

As Senior Vice President and Principal Policy Advisor at the Dallas Fed, Koenig is among a small number of Fed insiders who have added their voices to others drawing attention to the possible advantages of targeting nominal GDP. He starts this article by listing three “desiderata” of a monetary policy rule. These are (1) that the rule should avoid waste that might otherwise result from “sluggish” prices or wage rates and other “frictions”; (2) that it should maintain low and stable long-term inflation expectations; and (3) that it should promote financial stability.  He then proceeds to explain how a nominal GDP rule might achieve them all.

Concerning price and wage rigidities, Koenig’s argument is reminiscent of Myrdal’s: “If it is primarily money wages that are sticky, not product prices,” he observes, “then it will be optimal for monetary policymakers to try to avoid surprise changes in the market-clearing money wage and let product prices move up or down as needed to clear the labor and product markets.” Furthermore, “In an economy in which the principal real disturbances are shocks to productivity,” and “the income and substitution effects that productivity shocks have on employment are offsetting — a reasonable rough approximation — then the optimal wage policy is equivalent to targeting the level of nominal spending.” Koenig shows as well that “a nominal-income target for monetary policy distributes risk more efficiently across debtors and creditors than does a price-level target.” His overall conclusion is that “A level target for nominal spending…offers enough potential advantages relative to a simple price-level target that it deserves careful study.”

2014: Kevin Sheedy, “Debt and Incomplete Financial Markets: A Case for Nominal GDP Targeting

Sheedy’s very thorough and carefully-reasoned study is concerned exclusively with the task of identifying a monetary regime best suited to an economy that relies on fixed (“non-contingent”) nominal debt contracts. As such it takes up a theme first addressed in depth by Samuel Bailey 80 years earlier. Notwithstanding the passage of so much time, and Sheedy’s far more formal framework, his conclusion is essentially the same, namely, “that when debt contracts are written in terms of money, a monetary policy of nominal GDP targeting improves the functioning of financial markets.” Commenting on Sheedy’s work, James Bullard writes that it “has considerable potential to sharpen the ongoing debate on nominal GDP targeting, an idea that has not often had an explicit modern macroeconomic model behind it.”

2016: Julio Garin, Robert Lester, and Eric Sims, “On the Desirability of Nominal GDP Targeting

It’s nice to be able to conclude my survey with a paper written by my former colleague, Julio Garin, and two co-authors. As I observed in reviewing the paper by Kim and Henderson, theirs is only one of a number of papers that use sophisticated macro models to conclude that nominal GDP targeting beats most other simple monetary rules. Garin et al. “compare nominal GDP targeting to inflation and output gap targeting as well as to a conventional Taylor rule…on the basis of welfare losses relative to a hypothetical equilibrium with flexible prices and wages.” In other words, like Kim and Henderson, they don’t simple ask how NGDP targeting stacks up when it comes to stabilizing P or y or both — which isn’t the same thing.

Their findings? Although output gap targeting is generally ideal, nominal GDP targeting performs almost as well, and better than a Taylor rule. NGDP targeting is also a lot better than inflation targeting. Furthermore, it can even outperform output gap targeting if the output gap is observed with noise. Finally, the advantages of NGDP targeting over rival strategies increase as supply shocks become more pronounced, and in situations where wages are stickier than prices. If all this is starting to sound familiar, that’s called robustness.

***

That last remark compels me to conclude by answering a question that’s bound to  occur to many who have read this survey, to wit: if the theoretical case for nominal GDP targeting is so strong, why do so many monetary economists favor price-level or inflation targeting?

There are, I believe, two reasons. One is that these economists have tended to assume, implicitly or otherwise, a world in which (1) aggregate supply innovations, and innovations to total factor productivity in particular, are either non-existent or unimportant; and (2) factor prices are perfectly flexible or, at very least, more flexible than output prices. In such a world, nominal GDP targeting may not have any decisive advantage over price-level or inflation targeting, though it’s also unlikely to be any worse than either.

The other reason is that many monetary and macroeconomists treat fluctuations in the price level or inflation rate as bad per se, most commonly by treating them as arguments in central bankers’ “loss functions.” To say that this procedure lacks solid microfoundations is putting things mildly. A less temperate reply might be something like, “Who cares what central bankers like or don’t like? It’s peoples’ utility or welfare that matters.”

In short, if there’s a shortage of “serious” theorizing about what central banks ought to stabilize, it exists, not among proponents of nominal GDP targeting, but among those who continue to favor price-level or inflation targeting.

_____________________

[1]  For all their intricacies, there’s at least one respect in which such fully-articulated macro models still fail to provide an adequate framework for assessing the advantages of inflation or price-level targeting relative to those of targeting nominal GDP. So far as I’m aware, no one as yet has constructed a version of such a model in which the responsiveness of actual nominal prices to shocks that alter those prices general equilibrium levels depends on the nature of the shocks in question. In contrast, numerous less formal writings allow, for example, that money prices are much more responsive to supply (unit cost) innovations than they are to changes in demand. This last fact tends to further strengthen the case in favor of a stable NGDP rule.

[Cross-posted from Alt-M.org]

Now that some of the dust has settled from President Trump’s summit with North Korean leader Kim Jong Un, it’s worth taking stock of the politics surrounding it. As The Atlantic’s Peter Beinart points out, many Democrats and progressives have oddly decided to be staunch critics of the summit, harping on its limited achievements, the vague aspirations of denuclearization without concrete steps to get there, Trump’s bizarre obsequiousness in courting Kim, and this administration’s clear lack of preparation for such high-stakes diplomatic negotiations. These are all legitimate criticisms, by the way, but given how dangerously close the Trump administration came to potentially catastropic escalation only a few months ago (admittedly, a crisis of Trump’s own making), diplomacy, no matter how maladroit, is clearly preferable and should not be dismissed out of hand by those on the left.

However, the abject hypocrisy of the right is even more appalling. Republican Senate Majority Leader Mitch McConnell praised the summit as “an historic first step in negotiations.” House Speaker Paul Ryan articulated his “hope that the president has put us on a path to lasting peace in the Korean Peninsula.” Fox News host Laura Ingraham hailed  the summit as “like Gorbachev and Reagan,” to which Senator Lindsey Graham, who has argued for war and against diplomacy more often than most of his colleagues, approvingly replied, “Trump has done something no other president has done, he’s doing everything he knows how to avoid a war.” Graham went on to applaud Trump’s pledge to discontinue U.S.-South Korean military exercises: “this may be the last best chance in our lifetime for peace, and this is a bold move by the president.”

Those who follow politics in Washington, DC can see right off the bat how radical a departure all of this is from typical GOP talking points. It’s not hard to imagine the hysteria that would erupt if President Obama shook the hand of Kim Jong Un, praised the dictator’s leadership qualities, and sympathized with Pyongyang’s unease over U.S. military activities in Northeast Asia.

But to really get a flavor for it, behold this mashup of Fox News personality Sean Hannity, whose power to shape conservative views across the country should not be underestimated, railing against Obama’s nuclear diplomacy with Iran in 2013 while praising Trump’s summit with North Korea. Trump, Hannity says, “deserves a lot of credit for being willing to talk to somebody that everybody thought would be a bad idea,” adding that he sees “a lot of parallels between President Trump and Ronald Reagan.” But in 2013, he pilloried Obama’s diplomacy with Iran as “showing a lot of weakness” by “catering to the world’s dictators,” labeling Obama “literally, the Neville Chamberlain of our time.” 

Republicans and conservatives opposed diplomacy with Iran because, they said, America shouldn’t negotiate with enemies, we should batter them into submission. Now, they have apparently abandoned that principle. They also opposed the Iran nuclear deal on grounds that it was too narrow and failed to include non-nuclear issues, such as Iran’s regional behavior and its human rights violations. Now, with North Korea, they are singing a different tune. 

So far, North Korea has done little more than offer token concessions while keeping their nuclear and ballistic missile capabilities intact. By contrast, Iran forfeited 98 percent of its stockpile of enriched uranium, gave up thousands of operating centrifuges, acquiesced to severe technical restrictions on various aspects of their program for 10-25 years, and submitted to the most intrusive inspections regime in the world. And that was before they enjoyed a single day of sanctions relief.

It’s not just the GOP and conservative media that is shamelessly flip-flopping like a fish out of water. The Trump administration itself has had to engage in these contortions. Trump withdrew from the Iran nuclear deal on the basis that it was a weak giveaway to Tehran, though the likelihood of getting a more stringent agreement on North Korea is extremely remote. Secretary of State Mike Pompeo and National Security Advisor John Bolton each have a long pedigree of opposing negotiations with rogue states in favor of an uncompromising hardline approach. Now, apparently, not so much. Last year, the Trump administration obstinately rejected perfectly reasonable Chinese proposals for a “freeze-for-freeze” option with North Korea, in which, as a first-step to build confidence for negotiations, Washington would agree to suspend provocative military exercises with South Korea in exchange for Pyongyang halting its nuclear and missile tests. Now, that is roughly administration policy. 

Duplicity has always been a part of American politics. And, these days, we seem to be experiencing a truly unprecedented level of it under a president that tells outright lies as a matter of routine. The intensity of this particular moment in U.S. history can make the partisanship presented above seem mild and downright ordinary by comparison. But this kind of base dishonesty regarding core questions of war and peace makes it close to impossible to carry out foreign policy in a strategic way. I appreciate Republicans’ newfound support for diplomacy, but it is rather obviously a feature of their servile kowtowing to President Trump, not a considered position that can reliably outlast this brief moment.

The United States is remarkably insulated from foreign threats and has enormous leverage to engage in any negotiations with adversaries. Wherever and whenever diplomacy can reduce the risk of conflict, it should be pursued with confidence and vigor. Both parties must recognize the successes that peaceful engagement has yielded over the past half century of U.S. foreign policy, and the comparatively ruinous failures wrought by hardline militarism.

In unanimous decisions this morning, the Supreme Court turned away both partisan gerrymandering cases on grounds other than their ultimate merits – Gill v. Whitford (Wisconsin) by declaring the individual complainant to lack Article V standing arising from injury in his own district and sending the case back for him to establish that, and Benisek v. Lamone (Maryland) by finding it not an abuse of discretion for the lower court to deny a preliminary injunction, which does not mean the case will not be back at the regular injunction stage.

Neither decision reaches or resolves the main constitutional issues raised by the two cases, which both remain alive. As I mentioned in February, the Court had already signaled that it was not in a rush to resolve the issue right away (the calendaring was leisurely) and that Justice Anthony Kennedy was not going to prove an easy recruit for the four liberals. (He joined the conservatives in staying the Wisconsin decision below.) 

In the Wisconsin case, the majority held that the complainant needs to go back and demonstrate that his own district, and not merely others in the state, has been subject to “packing” or “cracking.” (The Maryland complainants had already made this kind of showing; they were suing over the lines of their own district, not the whole state map.) Justices Thomas and Gorsuch went further, saying the Wisconsin complainant’s failure to establish individual standing should have ended his case, rather than resulting in a do-over. 

In a concurrence on behalf of the four liberals, Justice Elena Kagan agreed on the need to send the case back for a showing of individual-district standing but emphasized that, in her view, once the complainant established that he could then introduce statewide evidence and seek statewide remedies. This would preserve more or less the full scope of what liberal litigation groups have been hoping to achieve with the Wisconsin case. Significantly, Justice Anthony Kennedy did not join the liberals on these points – although of course he could view the case as having been resolved without needing to reach such issues. Nor did the majority opinion, written by Chief Justice Roberts, concede Kagan’s assertion that courts “have a critical role to play in curbing partisan gerrymandering.”   

Whatever happens in the Court – and a North Carolina case could bring the issues back next term – there are good reasons for states to act on their own to curb the evils of partisan gerrymandering without waiting for marching orders from the nine Justices. Measures to take line-drawing out of the hands of self-interested incumbents, to prescribe strong standards of compactness and congruence with counties and other political subdivisions, to provide for transparency, open data access, and public map submission, and to ensure strong judicial review, make sense in themselves and do not require waiting on a Court that has shown a reluctance to decide. 

The Court has kicked the issue of partisan gerrymandering down the road. States shouldn’t. 

There is lots of talk from the Trump administration these days about how the U.S. is getting cheated on trade. In this context, they have done some cherry-picking of the data to emphasize high foreign tariffs, while conveniently ignoring high U.S. tariffs. For example, Trump will mention a 270% Canadian tariff on dairy products, without mentioning U.S. tariffs of up to 187% on sour cream. Or White House trade adviser Peter Navarro will mention EU auto tariffs of 10% and argue that those are much higher than the 2.5% tariffs for car imports to the U.S, but he won’t mention the 25% U.S. tariff on truck imports

So what’s the reality of tariff levels? The cherry-picking approach emphasizes particular products where tariffs are high, and as can be seen in the examples above there are still a few of these “tariff peaks,” including some imposed by the U.S.  But with so much variation on tariffs by product, an average tariff level is more informative. Unfortunately, it can be difficult to get an accurate picture of this (as discussed here). Here’s a sampling of a few countries and the EU (explanations to follow): 

  Simple Average (2016)
(WTO)
Trade Weighted Average (2016)
(World Bank)
Trade Weighted Average (2015)
(WTO)
New Zealand

2

1.3

2.5

Australia

2.5

1.2

4

US

3.5

1.6

2.4

EU

5.2

1.6

3

Japan

4

1.4

2.1

Canada

4.1

0.8

3.1

Switzerland

6.3

0

2

Mexico

7

4.4

4.5

China

9.9

3.5

4.4

Brazil

13.5

8

10.4

As you can see, the table has three categories of average tariffs. That’s because measuring tariff levels is not that easy and there are several different methodologies. The “simple average” in the first column takes all of the tariff levels set out in a country’s tariff schedules and averages them. But that figure can be misleading. For example, with some products, there might not be much trade even without a tariff in place, so counting a high tariff in the average is misleading.

The second and third columns – the first from the World Bank, and the second from the WTO and two other organizations, using different methodologies – look at tariffs applied on actually traded goods. But that can be misleading too, because a 100% tariff might eliminate all trade, and therefore a high, trade-retricting tariff would not show up in the figures.

The best approach I can see here is to provide both kinds of figures, which is what I’ve done in the table. Taking all of these tariff figures into account, it can be hard to come up with a precise ranking, but you can see that New Zealand and Australia are the low tariff leaders. The U.S., EU, Canada, Japan, and Switzerland come next, clustered closely together. Mexico has tariffs that are a bit higher. Then come China and Brazil with even higher tariffs.

One important point to note is that these are the generally applied tariffs, but some of these countries have FTAs with each other, under which special lower tariffs apply (the World Bank averages are the only ones that take into account lower FTA tariffs). For the U.S., that means NAFTA, under which almost all tariffs (dairy and peanuts, among others, excepted) are zero; the U.S. - Australia FTA; and various other FTAs.

The lower FTA tariffs lead to an important point. If you are on the Trump administration trade team, and you think foreign tariffs are too high, the solution is to negotiate trade agreements that lower them (in both directions). So far, unfortunately, that has not been their focus.

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