The Acton Institute
(The Acton Institute works to promote a free and virtuous society characterized by individual liberty and sustained by religious principles. Its goal is to help build prosperity and progress on a foundation of religious liberty, economic freedom, and personal moral responsibility.)
Free Trade Advances Despite Politics
By Phillip W. DeVous
GRAND RAPIDS, Mich. -- This week, the U.S. House of Representatives voted 215 to 214 to approve Trade Promotion Authority, or "fast-track" trade negotiating authority, for President Bush. Then the Senate Finance Committee moved the bill out of committee to the Senate floor. This legislation would allow the president to negotiate global trade treaties on a "take-it-or-leave-it" basis, no amendments allowed by the United States Congress. Recent presidents have held this authority, but the provision expired in 1994.
To be sure, the freedom to engage in mutually beneficial exchange is an essential component of a just social order. There is an essential relationship between a free, open economy and a free and prosperous people. These people are then free to pursue a variety of creative solutions in meeting their neighbors' needs.
There is no doubt that this provision marks a major advance for the free trade agenda in the United States. Liberalized trade has been a top priority for this administration. In a speech this April, President Bush expressed his conviction concerning the power of free trade:
"Open trade fuels the engines of economic growth that create jobs and new income. It applies the power of markets to the needs of the poor. It spurs the process of economic and legal reform. It helps to dismantle the protectionist bureaucracies that stifle incentive and invite corruption. And open trade reinforces the habits of liberty that sustain democracy over the long term."
The recent vote of the House of Representatives on Trade Promotion Authority would seem to be one step in advancing the principles of liberalized trade articulated by President Bush. However positive this vote is for a liberalized trade agenda, it is important to note that no piece of legislation is perfect, including this one.
There is a cliché concerning the business of politics that applies to this vote: "all politics is local." The "fast track" bill passed by the House of Representatives is a perfect example of this perennial political reality at work. Supporters of free trade, no doubt, are puzzled at some of the deals cut by lawmakers to pass "fast-track" legislation. Many of the compromises made are actually self-defeating blows to the expansion of free trade.
To pass congressional muster, the White House felt pressure to add some provisions that seem oddly out of place in a legislative provision that enshrines our national commitment to free and open markets. Two particular examples serve to illustrate this point. In a letter to Congressman Jim DeMint, R-S.C., the White House promised to use "whatever means necessary" to cancel textile export preferences that Congress previously granted the Caribbean, Central American, and Andean nations.
Secondly, White House officials also sought to allay the concerns of a bloc of Florida lawmakers who were concerned that the "fast-track" legislation would harm the domestic citrus market by increased competition with Brazilian citrus imports. No doubt, in agreeing to these provisions, lawmakers pursued protectionist policies to bolster textile manufactures and agricultural interests at home. Even in negotiating a central piece of the global free trade agenda, all politics are still local -- very local.
The difficulty with attaching such protectionist agendas to the "fast-track" legislation is that a central tenet of the legislation is gutted -- its ability to aid the economic development of poorer nations through expanded trade. Poorer nations rely heavily on products like textiles and agricultural products for export and trade. These products serve as the foundation for economic development in developing nations that, by definition, do not possess the capacity or workforce to produce microchips, computers, automobiles, and other high-technology products.
Furthermore, such a protectionist agenda, which excludes trade partners in the developing world, denies an essential component of human dignity -- a chance for people to work and contribute to their own well-being. If the workers in a developing nation have no market or cannot expand the market for the products they produce, many workers will be forced out of a job. Potentially, many more will not be able to enter the work force.
Protectionist policies squelch opportunities for productive work, yielding damaging effects to the inherent dignity of man, who is charged to be productive, creative, and contributive to the world in which he lives.
With the attachment of these protectionist provisions to the "fast track" legislation, lawmakers have effectively cut out many potential trading partners in developing nations. In turn, these policies will force U.S. consumers to pay higher prices for products and deny economic development and opportunity to nations sorely in need of expanded markets for their products.
This is certainly at odds with President Bush's stated goal of liberalizing trade in order that the power of markets may be applied to the needs of the poor.
Caveats said, the Trade Promotion Authority legislation is a solid first step in expanding the free trade agenda. The imperfections of this bill, while serious, do not outweigh the usefulness of this particular piece of legislation. It is an important first step in the effort to expand free trade and open markets around the globe, but it is just that -- a first step.
It is clear that protectionist policies for homegrown interests still command a powerful voice in our nation's trade policy. No doubt, many lawmakers understand such policies as the "price of doing business." This is a price, however, that will be born out in higher costs for consumers and the exclusion of developing countries as trading partners. A high price, indeed.
(Phillip W. De Vous is the public policy manager of the Acton Institute.)
The Ludwig von Mises Institute
(The LVMI is a research and educational center devoted to classical liberalism -- often known as libertarianism -- and the Austrian School of economics. Grounded in the work of economists Ludwig von Mises and Murray N. Rothbard, LVMI seeks a radical shift in the intellectual climate by advancing the Austrian School of economics and by promoting the market economy, private property, sound money and peaceful international relations, while opposing government intervention as economically and socially destructive.)
Wartime's Lost Liberties
By Douglas Carey
AUBURN, Ala. -- The terrorist attacks of Sept. 11, along with the continuing attack on Afghanistan, have softened many people's stance on our cherished freedoms and have emboldened almost every politician in Washington to embrace new laws that severely curtail our liberty and right to privacy.
Of course, all of these new laws and executive orders have been passed in the name of "the war on terrorism." Some of these new laws include the ability to hold a person suspected of any type of terrorist activity without charges and without showing any evidence.
Secret military tribunals can now be used whereby a suspected enemy of the state can be tried by five jurists and sentenced to death by a simple majority ruling. In a final blow to everybody's rights, the Bush administration proposed that law officials should be able to listen in on a suspect's conversation as he speaks with his lawyer.
When defending these new measures, many in Washington are using a standard defense for these actions. Fearful that the American people will not stand for a loss of their hard-won liberties, many pundits and politicians have begun to look to historical precedent.
The Wall Street Journal ran an editorial piece with the very unnerving title, "Security Comes Before Liberty." In this editorial, Jay Winik looked to the historical actions of Abraham Lincoln, John Adams, Woodrow Wilson, and, of course, Franklin Roosevelt. His basic argument is that these presidents severely curtailed freedoms and suspended civil liberties in the name of national security and that the majority of these actions did not have any long-term effect on society.
In reality, Abraham Lincoln, the president who began the trend of more federal power and diminished states' rights, set a precedent of dictatorial actions that is still being looked to today as an excuse for more federal power. During his reign as president during the Civil War, Lincoln made the unprecedented move of suspending, through an unconstitutional order, the writ of habeas corpus, or the protection against unlawful imprisonment.
Also during this time, Lincoln had an estimated 13,535 people detained for merely expressing opposition to the war itself. None of these people ever even heard evidence against them and were never brought to trial. In possibly his most noticed act of despotism, Lincoln had U.S. Rep. Clement Vallandigham of Ohio arrested for "disloyal sentiments and speeches."
When the public finally rose up against this action, Lincoln released Vallandigham from prison and had him banished from the country. Even in death, Lincoln's repressive spirit lived on, as anybody who was even remotely connected with John Wilkes Booth's attempted escape after assassinating the president was hanged or sentenced to life in prison.
President Woodrow Wilson and the Congress of the time used World War I as their excuse to curtail freedom and arrest dissenters. In 1918, the Sabotage and Sedition Acts were passed, which allowed the federal government to punish anybody who had an expression or opinion that was "disloyal, profane, scurrilous, or abusive." Using this act, the feds at one point actually forbade the Postal Service from delivering publications that were antiwar.
Of course, no person in American history has succeeded in expanding the powers of the state more than Franklin Roosevelt. Even those who believed whole-heartedly in expanded state powers during World War II were shocked when Roosevelt signed Executive Order 9066, which gave the government the power to force anybody of Japanese descent out of their homes and into primitive internment camps. Over 110,000 Japanese civilians were detained in this way. Not one of them had been accused of any crime. After the war was over, the majority of those detained went home to find their property looted and destroyed.
In uncertain times such as today, it is too easy to look the other way when the federal government expands its power and curtails our freedoms. The attorney general himself told a Senate panel: "To those who scare peace-loving people with phantoms of lost liberty, my message is this: Your tactics only aid terrorists, for they erode our national unity and diminish our resolve."
Many others say that any lost liberties will be restored once the war is past us, or once terrorism has been eradicated. Although history has shown us that the most egregious laws and orders are usually rescinded eventually, each bold step by the government has led to even bolder steps in the future.
"From the beginning," wrote Ludwig von Mises in "Nation, State, and Economy" in 1919, "the intention prevailed in all socialist groups of dropping none of the measure adopted during the war after the war but rather of advancing on the way toward the completion of socialism."
In Mises's view, only the resistance of public opinion has prevented wartime measures from becoming permanent. Regardless of what a person's opinion is on the recent expansion of federal power, simply stating that it's been done in the past is certainly not a legitimate argument to do the same thing today.
(Douglas Carey is editor of The Burden.)
Across the Pond Scum: The UK and the EU make John Ashcroft look like a civil libertarian
By James Morrow
LOS ANGELES -- To listen to European papers tell it, the jackbooted thugs long predicted by America's political fringes have finally taken over, Muslims are being rounded up like Japanese in the wake of Pearl Harbor, and anyone who speaks a discouraging word has bought himself a one-way ticket to a gulag in Alaska. Yet the bureaucratic power grabs being made in Washington in the name of terrorism pale in comparison to what's going on both in Britain and the rest of Europe, often with far less justification than the threat of madmen looking to crash planes into office buildings.
England's common law is one of its great gifts to Western civilization, and the traditions of trials by jury set down in the Magna Carta in 1297 have created, wherever installed, some of the fairest and most effective judicial systems in the world.
Yet something as fusty and musty as the Magna Carta, with its Old English phrasings and talk of lords, knights, barons and earls just doesn't have a place in Tony Blair's modern "Cool Brittania." According to a report in the New Statesman, Britain is about to throw away much of this proud and important legal heritage by eliminating almost two-thirds of all jury trials, allowing a wide range of offenses (including any crime with a maximum sentence of less than two years) to be tried solely by a judge employed by Her Majesty.
To make the situation scarier, much of this change is being implemented by bureaucratic stealth and with as little public comment as possible -- an audacious move that not even Bill Clinton, who never met an executive order he wouldn't sign, would be jealous of. As the New Statesman's Nick Cohen put it, "In America, Australia or any other common-law democracy, it would need a coup d'etat to implement the government's program."
Part of the reason Blair's government has been able to get away with its scheme is the British public's absolute outrage at a crime wave that has had shocked Britons gasping, as one did in a CBS News report last May, that "London is more dangerous these days than New York." (The fact that the U.K. has embarked on an aggressive campaign to disarm its citizenry -- going so far as to prosecute a farmer for murder after he shot and killed a burglar on his property -- is surely not unrelated to this phenomenon). Add to that the alleged cost-saving aspect, and it's easy to see why bureaucrats in London are willing to sell out 700 years of heritage for a few pieces of Pounds Sterling.
But there's another aspect, even more worrisome, behind the proposal: the Blair administration's long love affair with the European continent and the Prime Minister's desire to drag his recalcitrant, unreconstructed populace into the supra-national organization. Over on the other side of the Channel, in Brussels, EU legislators are pushing a definition of terrorism (which would have to be incorporated into all member states' law books) which includes "offenses intentionally committed by an individual or a group against one or more countries, their institutions or people, with the aim of intimidating them and seriously altering or destroying the political, economic, or social structures of a country."
While any thinking human being is rightfully outraged by terrorism, whether at the World Trade Center, on a Belfast shopping street, or in an Israeli nightclub, it's plain to see how this definition goes too far. No one particularly likes having their city shut down by patchouli-reeking globalization protesters for a few days, but it's also probably not a good idea to include the majority of them in terrorist databases, as the EU proposal would do.
It is interesting to look at the European definition of terrorism in the context of the Blair government's attempt to toss out history. After all, by getting rid of jury trials and tossing aside the Magna Carta -- which guarantees freedom and accountability that much of the world's citizens would happily risk their lives to live under -- the Home Office is not just putting its citizens in jeopardy, it is blowing up England's cultural heritage. Or, as they might put it in Brussels, "seriously altering or destroying the political, economic, or social structures of a country."
It may not be as dramatic as, say, the Taliban destroying the giant Buddha at Bamiyan, but the impulse is the same: Powerful people don't always want the past intruding on their power, to say nothing of individual citizens.
(James Morrow is a freelance writer based in New York City and Sydney, Australia.)
The Cato Institute
Boomers Fleece Generation X with Social Security
By Thomas A. Firey
WASHINGTON -- Generation X-ers and Gen Y-ers like me have a hard time showing interest in what goes on in Washington. But we had better end our apathy -- and soon -- or we'll spend the rest of our lives paying for it. Members of the generation that came before us -- the Baby Boomers -- are trying to pull a scam under the guise of "protecting" Social Security. If they succeed, we -- and our children -- will be the poorer for it.
Everyone knows Social Security is in trouble (President Bush's Commission to Strengthen Social Security released its report on reform this week). But few people understand what that trouble is and whom it will affect. Understanding that is the key to understanding the scam.
Right now, Social Security is in great health. This year, like so many before, hundreds of billions of dollars will pour into it from FICA and payroll taxes, and only some will go back out as benefits to retirees. The rest will be exchanged for government bonds, which the federal government will pay back -- with interest -- to Social Security in the coming years.
But things will change in the next decade, when the Boomers will retire and start collecting benefits. By 2016, so many people will be drawing Social Security that the money needed to cover benefits will be more than what we Gen-X/Y workers will be paying in taxes. Fortunately, the program will be able to cash in the bonds that it's now buying and will use the repaid principle and interest to keep up the benefits.
However, that can support Social Security for only a few more decades. The bonds will all be cashed in by 2038, just as we Gen-Xers (whose Social Security tax money will purchase many of those bonds and whose federal tax money will pay them off) approach retirement age. So, just as we're about to collect Social Security, there will be nothing left in the Social Security storehouse for us to collect.
Hence, the Social Security crisis does not involve today's seniors -- Social Security will have plenty of money for the next 35 years. Instead, the crisis concerns Gen-X/Yers, who will pay in a lot and receive just a little.
Ever since Gen-X/Yers began working, we've paid 12.4 percent of our earnings to Social Security -- half taken through the "FICA" tax on our paycheck and half through the payroll tax. In the coming years, Congress likely will increase that rate to more than 17 percent to delay the 2038 catastrophe. What is more, the Medicare tax (which is now a mere 2.9 percent) will increase because that program faces an even worse crisis than Social Security.
In contrast, the Boomers will get a bargain. When they entered the workforce in the late 1960s, they paid only 6.5 percent of their earnings to Social Security and nothing to Medicare. For about half of their working years, the Boomers paid 10 percent or less to Social Security and less than 1.25 percent to Medicare. Only from 1990 on, when the Boomers had earned paychecks for a quarter-century, did they start paying 12.4 percent to Social Security and 2.9 percent to Medicare -- the same percentage we Gen-X/Yers have paid our whole lives.
That's the Boomers' bargain: They've paid less of their earnings into Social Security than we Gen-X/Yers, yet they'll receive more in benefits than we will and we'll pick up the tab. And when we retire, there will be no money saved in Social Security to pay for our retirement, unless we pull the same scam on our children that the Boomers are pulling on us.
The Boomers are working hard to protect their sweet deal. Many Boomer-elected politicians claim it's "too risky" to change Social Security and do away with the scam. One, Rep. Jerrold Nadler (D-N.Y.), even asserts that the program is in no trouble at all and should be left alone.
But we Gen-X/Yers are catching on; we're seeing through the phony claims and recognizing the generational cash-grab scam for what it is. And we are beginning to realize that we need to offer this warning: If the Boomers don't reform Social Security now, they'll have no right to complain when we do so in the future.
(Thomas A. Firey is managing editor of Regulation, The Cato Review of Business and Government, published by the Cato Institute.)
ABM Withdrawal is Premature, Scholars Say
WASHINGTON -- President George W. Bush gave formal notice Thursday that the United States is pulling out of the 1972 Anti-Ballistic Missile Treaty. Cato Institute defense analysts Ivan Eland and Charles Peña offered the following comments on the President's announcement.
"The Cato Institute supports the development of a limited national missile defense to protect the U.S. homeland and acknowledges that withdrawal from the ABM Treaty eventually may be necessary. But now is not the time to make that decision.
"First, the testing program for the most mature elements of a limited land-based missile defense system is still in its infancy. The results to date are largely positive and promising. But it is too early to make a deployment decision, which would require either amending, renegotiating or withdrawing from the treaty. Adequate testing of a limited land-based system can continue within the constraints of the treaty. Therefore, there is no immediately compelling reason to unilaterally withdraw from the treaty.
"Second, President Bush claims that the ABM Treaty 'hinders our government's ability to develop ways to protect our people from future terrorist or rogue-state missile attacks.'
However, ballistic missiles are the least likely means by which terrorists would attack the United States because missiles provide an immediately known point of origin, which would result in immediate U.S. retaliation.
"If a threat from rogue states (e.g., Iran, Iraq, and North Korea) emerges, it will not materialize for a number of years. Since both the threat and a thoroughly tested limited land-based missile defense system are still in the future, the United States does not need to abandon the ABM Treaty now. It can continue testing until a well-informed deployment decision can be made.
"Finally, although President Bush stated that Russian President Putin agreed that the 'decision to withdraw from the treaty will not in any way undermine our new relationship or Russian security,' withdrawing from the treaty (much like NATO expansion) could unnecessarily antagonize the Russians and may undermine the great progress in the changing U.S.-Russian relationship, especially the agreement by both presidents to dramatically reduce strategic nuclear arsenals and the two nations' continued cooperation in the war on terrorism and safeguarding Russia's dangerous stockpile of weapons of mass destruction.
"Ultimately, it may be necessary and in the United States' national security interests to withdraw from the ABM Treaty. But continued development and testing of a limited land-based system to defend the U.S. homeland does not require withdrawal now. The only reason to withdraw from the ABM Treaty now is to pursue a more robust, global missile defense (including sea-based, air-based and space-based defenses) that is designed to protect friends and allies around the world--all of whom are rich enough to pay for their own missile defenses.
And such a robust and far-flung missile defense could actually encourage U.S. policymakers to engage in reckless overseas military adventures against nations with weapons of mass destruction and long-range missiles, which would undermine -- not enhance -- U.S. national security.
American Ingenuity: A Key to Future Security
By John Raisian
STANFORD, Calif. -- In a crisis such as the terrorist attacks on September 11, it is natural to look to our government leaders to set the course. But we'd be making a terrible mistake if we relied too heavily on top-down political solutions, ignoring our real strength -- the decentralized ingenuity of the American people.
Consider just one example. In the weeks after the attacks, we wrestled with ways of improving airport security. In Congress, two fundamentally different possibilities emerged. Either we could federalize airport security, making it the job of the government, or we could permit airport security to remain in the private sector, using the government to mandate higher standards, to delegate the responsibility for meeting such standards to private security firms, and to monitor the performance of private sector solutions.
Which methodology should we rely on for safety in the air? One similar to the United States
Postal Service, a model that has regularly been criticized for costly and inefficient service
that too often proves unreliable? Or the competitive alternative that led creative individuals to introduce FedEx and UPS?
In the end, Congress chose the former. I realize that we are in a crisis and that the American public looks to government's leadership to assure our well-being, but I am dismayed that we continue to settle for inferior solutions because they are seen as politically superior. Why should we settle for less?
The challenge for our government is to stop ducking its responsibility, instead dedicating itself to finding the best solution to the problem of airport security -- uncompromised safety at the lowest cost possible -- and to other problems like it that are sure to arise. Overwhelmingly, the best solutions will be competitive solutions.
Economists around the world generally understand and applaud the workings of competition and private markets. It is difficult to make the case for centralized decision making of the kind present within socialism, certainly for the kind of command economies that once dominated the Eastern bloc.
We should be suspicious of government solutions that entail government agencies and institutions directly managing an enterprise. We need to expand the ingenuity of the American citizenry at large, encouraging the development of solutions in the marketplace. Is this not the order of the day?
It is natural for us to turn to our government leaders in a time of crisis. But it is not a foregone conclusion that our citizenry expects the government to centralize more of the workings of our society. Over the longer term, we must look to the ingenuity of our people to address the many elements of this crisis.
The leadership we need should create institutions structured to help us accomplish our aims, not have us sit back and expect government "engineers" to solve our problems. Decentralized activity can respond to shortcomings with a speed and entrepreneurial energy that government can seldom match. Such approaches will have a great deal to contribute to our nation in the days ahead.
(John Raisian is director and senior fellow at the Hoover Institution.)