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Welcome to the Defense Download! This new round-up is intended to highlight what we at the Cato Institute are keeping tabs on in the world of defense politics every week. The three-to-five trending stories will vary depending on the news cycle, what policymakers are talking about, and will pull from all sides of the political spectrum. If you would like to recieve more frequent updates on what I’m reading, writing, and listening to—you can follow me on Twitter via @CDDorminey

  1. Bolton Calls National Debt ‘Economic Threat’ to US,” Toluse Olorunnipa. Hot off the presses! National Security Advisor John Bolton calls for significant cuts to discretionary spending in order to get the country back on the path of fiscal sustainability. The new trajectory? Bolton, and the President himself, have called for defense spending to be cut or levelled off in the short-term—a radical change from the administration’s previous two budgets. 
  2. In The Shadow of Reagan’s Legacy, Trump Is Failing,” Alexandra Bell. This article talks about why Reagan negotiated the INF treaty that President Trump is trying to dismantle and juxtaposes Reagan’s belief in arms control as a stabilizing force against the current administration’s actions. 
  3. The Nation Needs A 400-Ship Navy,” Thomas Callender. In the interest of showing the true breadth of this field, I’ve included this new report by the Heritage Foundation that calls for an increase over the adminstration’s current 355-ship plan for the Navy. Building to a 400-ship Navy will require $4-6 billion more annually than is already allocated, during a time of competing priorities and sky-high debt (see first article). 
  4. Mattis wants to boost fighter readiness. Here’s how industry could help,” Valerie Insinna. Last month, Secretary Mattis said that he’d like to get fighter readiness up to 80 percent—this would include all the F-35, F-22, F-16, and F/A-18 fighter jets. Readiness has been a rallying cry from the Pentagon for several years, but if Mattis intends to put his money where his mouth is, that could mean fewer dollars for new procurement projects in favor of upgrading and sustaining current platforms. 

Proposition 10 on the California ballot would empower local governments around the Golden State to institute more and stricter rent control. Rent control laws infringe on landlords’ rights of property and contract; as critics point out, they also have a long history of making housing shortages worse, discouraging both the construction of new rental units and maintenance of the old while making it harder for newcomers to find a place to live. 

Though once favored in voter surveys, Proposition 10 has sagged lately, well behind in one poll and ahead in a second by only 41-38 with 21 percent undecided.  But advocates of liberty (and all who prize the lessons of Economics 101) shouldn’t get complacent.  Aside from the imponderables of turnout and momentum – first-time voters still lean toward the proposition, which has been endorsed by Bernie Sanders and the DSA – even a defeat for 10 could still leave the door open to future legislation in Sacramento working some of the same changes. Gubernatorial front-runner Gavin Newsom, for example, declares himself a supporter of rent control in principle and might preside over the passage using the conventional legislative process of what could get billed as a compromise measure with supposedly less radical provisions. 

It’s true that many California localities, the Bay Area especially, are experiencing skyrocketing housing costs. That has a lot to do with intense demand to live and work in places like Silicon Valley and San Francisco, and even more to do with the tight regulatory lid on new residential construction that artificially suppresses the supply of dwellings in the state generally and especially in desirable communities and near the coast. By shifting the blame for the resulting situation to owners of existing rental units, rent control would make it even less likely that Bay Area and coastal governments will take the one measure that would be effective against spiraling housing costs, namely legalizing much more new construction. 

As a classic instance of an infringement on economic liberty that often results in dire practical consequences over the long term, rent control has been a subject of interest to Cato from the institute’s earliest years and ever since then, in output ranging from multiple legal briefs, through a classroom treatment (at Libertarianism.org, by Howard Baetjer), to Ryan Bourne’s recent piece on Jeremy Corbyn’s plans to reimpose rent control in Britain, to.  Two papers from recent years:  

* “The Effects of Rent Control Expansion on Tenants, Landlords, and Inequality: Evidence from San Francisco” (Research Briefs in Economic Policy no. 109, April), by Rebecca Diamond, Timothy McQuade, and Franklin Qian of Stanford University. To quote the summary in Cato Policy Report this summer, the authors “study the effects of a 1994 San Francisco ballot initiative that provided rent control for small multifamily housing built before 1980. They find that any benefits to tenants of rent-controlled properties were counterbalanced by landlords reducing the supply of housing in response to the law.”

* “Housing Market Spillovers: Evidence from the End of Rent Control in Cambridge, Massachusetts” (Research Briefs in Economic Policy no. 9, 2014), by David H. Autor, Christopher J. Palmer, and Parag A. Pathak (“Our bottom line estimate is that the end of rent control added $2 billion to the value of the Cambridge residential housing stock over the ensuing decade following rent-control removal.”)

By the way, the chief group pushing Proposition 10 has been a Los Angeles-based nonprofit called the AIDS Healthcare Foundation. If you wonder what the rent control issue has to do with AIDS or healthcare, let that serve as a reminder to be extra-careful with your charitable giving, no matter how commendable or uncontroversial a group’s name or mission may sound.

 

 

 

 

Many commentators have recently written and said that members of the migrant caravan and Central American immigrants in general are diseased.  Former Immigration and Customs Enforcement agent David Ward claimed that the migrants are “coming in with diseases such as smallpox,” a disease that the World Health Organization (WHO) certified as being eradicated in 1980.  One hopes Mr. Ward was more careful in enforcing American immigration law than in spreading rumors that migrants are carrying one of the deadliest diseases in human history nearly 40 years after it was eradicated from the human population.  But even on other diseases, Ward and others do not have a compelling argument.

WHO has national estimates of vaccination coverage rates by country and type of vaccine.  It’s unclear whether vaccination coverage rates include immigrants, but they definitely include those born in each country as of 2017.  Vaccination coverage rates for the United States were unavailable for Tuberculosis and one of the polio vaccines (IPV1) while the IPV1 vaccine coverage rate is also unavailable for Costa Rica.  We shouldn’t expect vaccination rates to be the same in all countries for at least two reasons.  First, some diseases are more prevalent in certain climates so the requirement for vaccination there can be lower or higher.  Second, vaccines have a positive externality so there is less of an individual incentive to become vaccinated as all of the benefits are not internalized to the individual who receives the shot.  I expect the first reason to be more important than the second as enough benefits are internalized for the net-benefit of a vaccine to be positive (yes, vaccines are great) while many of the governments in these countries strongly encourage or mandate vaccination. 

Figure 1 shows that average vaccination rates for Tuberculosis (BCG), Diphtheria, Pertussis, & Tetanus (DTP1), Diphtheria, Pertussis, & Tetanus (DTP3), Hepatitis B (HepB_BD), Hepatitis B (HepB3), Haemophilus Influenzae (Hib3), Polio (IPV1), Measles 1st Dose (MCV1), Measles 2nd Dose (MCV2), Streptococcus Pneumoniae (PCV3), Polio (Pol3), Rubella (RCV1), and Rotavirus (RotaC).  The United States is in the middle of the pack with an 89 percent average vaccination coverage rate. 

 

Figure 1 Average Vaccination Coverage Rates
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The following figures all show the vaccination coverage rates for different vaccines in Central American countries relative to the United States.  In some figures, some countries are excluded because there are no WHO estimates of their vaccination rates.  The United States does not have the highest vaccination coverage rate for any vaccine reported below.  Perhaps members of the migrant caravan have lower vaccination rates than their fellow countrymen or they are carrying other serious contagions that cannot be vaccinated against.  But for most of these illnesses below, you have more to fear from your fellow Americans than from Central Americans.

 

Figure 2 Tuberculosis (BCG) Vaccination Coverage Rates
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Figure 3 Diphtheria, Pertussis, & Tetanus (DTP1) Vaccination Coverage Rates
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Figure 4 Diphtheria, Pertussis, & Tetanus (DTP3) Vaccination Coverage Rates
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Figure 5 Hepatitis B (HepB_BD) Vaccination Coverage Rates
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Figure 6 Hepatitis B (HepB3) Vaccination Coverage Rates
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Figure 7 Haemophilus Influenzae (Hib3) Vaccination Coverage Rates
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Figure 8 Polio (IPV1) Vaccination Coverage Rates
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Figure 9 Measles 1st Dose (MCV1) Vaccination Coverage Rates
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Figure 10 Measles 2nd Dose (MCV2) Vaccination Coverage Rates
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Figure 11 Streptococcus Pneumoniae (PCV3) Vaccination Coverage Rates
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Figure 12 Polio (Pol3) Vaccination Coverage Rates
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Figure 13 Rubella (RCV1) Vaccination Coverage Rates
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Figure 14 Rotavirus (RotaC) Vaccination Coverage Rates
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Center for a Free Economy president Ryan Ellis writes in the Washington Examiner that President Trump “has caved to the socialists” by proposing to set the prices that Medicare pays for certain drugs at a percentage of the prices that foreign governments set for those drugs:

Unfortunately, rather than fighting the socialists, the president has decided to become one with them — at least when it comes to prescription drugs. After spending most of this year rightly condemning governments in Europe and elsewhere for ripping off Americans by imposing below-market price controls on drugs, Trump and [Secretary of Health and Human Services Alex] Azar basically surrendered to the price controls and announced we would be adopting them ourselves…

By letting the foreign price controls serve as a reference price control here, Trump has put us down the same path of scarcity and rationing all too often seen in the rest of the developed world.

The purpose of Trump’s proposal is indeed to reduce the prices Medicare pays for these drugs. Medicare currently pays much more for these drugs than government-run health systems in other nations.

Beyond that, Ellis’s oped crystallizes everything conservatives get wrong about drug pricing and Medicare purchasing in general. A few clarifications:

  1. No one knows what the “right” price is for any drug. We need market prices because they create incentives that naturally and always push prices in the right direction. 
  2. Medicare’s administered (read: ouiji-board) prices are indeed price controls, but not in the usual meaning of the term. They do not restrain prices anywhere but within the Medicare program.
  3. Medicare’s administered/controlled prices are not market prices, any more than other governments’ administered/controlled prices are market prices. 
  4. The Trump proposal would merely change the way Medicare comes up with the prices it pays for drugs. Those prices would not be any more “price-controlled” after the Trump proposal than they were before. They would just be lower–if the proposal achieves its stated goal, that is, which may or may not happen (more below).
  5. Conservatives who argue Medicare should not pay less than it currently does for drugs need to address the paradox inherent in their argument that, in order to restrain government and have a free economy, government must spend more. In order to fight socialism, taxes must be higher.
  6. One cannot import a price control. That’s not how they work. A government can either impose price controls on its own populace, or not. It cannot import the coercion another government exerts on its own citizens.

Ellis is correct when he writes, “Markets do a much better job reducing drug prices than government price controls do, and they do it while making prescription medicines widely available to patients, as opposed to rationed due to scarcity.” But the end result of these misunderstandings and misconceptions is that conservatives end up crowding out markets and/by opposing efforts to reduce government spending. This is why the Left believes, with justification, that when it comes to health care conservatives are just a bunch of cronyists.

Another irony: the more likely impact of Trump’s reference-pricing scheme is that prices in other nations would rise, which is exactly what Ellis says he wants.

Overcharged by Cato adjunct scholars Charlie Silver and David Hyman is the antidote to this strand of un-conservative conservative thinking. 

Power Problems is one year old! In our first year, the podcast has covered a lot of ground, from the death of the Iranian nuclear deal to the defense budget, trade policy and nuclear weapons. Surprising no one, we’ve spent way too much time talking about the Middle East and the curious foreign policy perspectives now emanating from 1600 Pennsylvania Avenue.

But as we head into the second year of our podcast, we’d like to get some feedback from our listeners, so we can give you more of what you enjoy. To help us out, please take a couple of minutes and fill out a quick survey on the podcast. You can find the survey here.

If you’re not already a listener, and want to hear what we’re all about, you can hear myself, Trevor Thrall, and a selection of guests from across the political spectrum discussing top foreign policy issues biweekly. You can find us on iTunes, Stitcher or via the Cato Audio app. 

Thanks for your feedback, and thanks for listening to Power Problems! 

President Trump recently said, “I’m a nationalist. OK? I’m a nationalist.”  Trump didn’t give a definition of what a nationalist is or what that ideology entails.  Fortunately, political theorist Yoram Hazony recently wrote The Virtue of Nationalism where he attempted to define and present a persuasive argument in favor of nationalism.  This was a worthy goal as nationalism is currently a popular political ideology.  The time is right for a book that defines nationalist and coherently and consistently makes the case for it.  Unfortunately, The Virtue of Nationalism is not that book. 

Other reviewers have identified its many problems, so instead of writing another review, I’m going to list some ridiculous claims that Hazony makes in his book and some of the logical implications of those claims.  Those claims and implications are numbered below and come from his book and I identify them as one or the other.  They are my summaries of his claims and NOT direct quotes.

1.  Nationalists can’t do the bad things that nationalists are most known for, according to Hazony’s definition.

Early in his book, Hazony wrote that he “will not waste time trying to make nationalism prettier by calling it ‘patriotism,’ as many do in circles where nationalism is considered something unseemly.”  True to his word, Hazony wasted zero-time conflating nationalism and patriotism, the latter being different and mostly positive.  He just wasted most of his book arguing that any nation-state that attempts to conquer other nations is not really a nation-state. 

According to Hazony, a nation is combination of “a number of tribes with a common language or religion, and a past history of acting as a body for the common defense and other large-scale enterprises” (18) and that “the world is governed best when nations are able to chart their own independent course, cultivating their own traditions and pursuing their own interests without interference” (3). 

Hazony contrasts nation states with imperialist states that have universal ideals that he claims leads to conquest.  Thus, nation-states cannot seek to conquer other nation-states as that would make them imperialist states because they do not respect the independent course of other nations.  According to Hazony, a state cannot be a nation-state and imperialist (dominating or seeking to dominate other nations) at the same time due to his unique definition that conveniently excludes the “bad” nation-states.  In my reading of the literature on nationalism, historian Douglas Porch was more likely correct when he wrote: “Colonialism was not, as Lenin claimed, ‘the highest stage of capitalism.’ Rather it was the highest stage of nationalism.”

2. Hitler and the Nazis were not nationalists.

Following his definition of nationalism, Hazony repeatedly claims that the Nazis were not really nationalists.  I know of no other serious historian of the Third Reich or other thinkers on nationalism who would go so far as to say that Hitler or the core ideology of the National Socialist German Workers Party weren’t nationalists.  They were, of course, nationalists.  The first point of their political platform was: “We demand the unification of all Germans in the Greater Germany on the basis of the people’s right to self-determination.”  The evidence that the Nazis considered themselves nationalists, that others considered them nationalists, and that they fit into the scheme of nationalism is so massive that it would be silly to run through it all. 

Hazony should have just argued that not all nationalists are Nazis and that very few of them have achieved or even attempted to achieve that level of evil – which would be perfectly reasonable and true statement!  Not all nationalists are Nazis (very few are, in fact), so this would have been a very reasonable acknowledgment for him to make that would barely even rise to the level of a concession.  Carlton Hayes wrote a useful taxonomy of nationalism with Nazism on one extreme and liberal nationalism on the other.  There was no need for Hazony to make the blatantly false historical claim that the Nazi’s weren’t nationalists in order to argue in support of nationalism in the modern world.

3. Europe has never had nation-states, even during the age of nationalism.

This is an implication of Hazony’s unique definition of nationalism and nation-states, not something that Hazony explicitly wrote in his book.  According to his unique definition, there were no nation-states in the so-called age of nationalism in Europe.  During the age of European nationalist in the 19th and 20th centuries, France, the United Kingdom, Spain, Portugal, the Netherlands, Germany, Italy, Belgium, Denmark, and other nation-states were imperialists too.  They conquered colonies and overseas territories populated by non-nationals that they ruled with ghastly humanitarian consequences.

If Nazi Germany was not nationalist because it conquered other countries, then surely those European nation-states in the age of nationalism were also not nationalist because they conquered other countries.  I asked Hazony about this and his response was unsatisfying (Figure 1). 

Figure 1

Twitter Exchange Between Yoram Hazony and Alex Nowrasteh

 

 Source: Alex Nowrasteh’s Twitter Account on September 19, 2018.

 4.  Nationalism has nothing to do with race or ethnicity (page 20 of his book).

Hazony makes this claim specifically about the ancient Israelites.  I’m not a Torah scholar so he may be correct in that specific case.  However, many other nation-states are explicitly defined by ethnicity.  The Latin root of nationalism is natio, which means tribe, ethnic group, race, breed, or other divisions by birth.  Hazony’s definition that a nation-state forms from “a number of tribes with a common language or religion, and a past history of acting as a body for the common defense and other large-scale enterprises” is highly correlated with ethnicity, to say nothing of the historical inaccuracy of his theory.  There is much research arguing that there is a link between ethnicity and nation. 

Hazony could have argued that nation-states can also be formed by civic attachments too, thus widening the definition as many modern scholars do so they can avoid the ugly implications of arguing for a race- or ethnicity-based nation-state.  However, Hazony specifically wrote that nations formed along civic lines are systematically unstable and impossible to hold together, at best temporary, and that they function poorly relative to nation-states created with the ethnicity-correlated attributes above (156-157).  The United States, Switzerland, Canada, Australia, and New Zealand are four wealthy states that are functioning very well despite not being nation-states under his strict definition.

5.  Nation-states are governed by consent, not coercion. 

 Hazony makes this claim several times in his book.  Nation-states have police, courts, military, and other institutions to coerce individual compliance with its law and rules just as every government does.  Perhaps governments in nation-states require less coercion to govern well as they are more homogeneous, thus theoretically making it easier to reach more broadly held policy consensuses that require less coercion.  But that would be an empirical claim that Hazony does not address that is doubtful given the large and complex legal enforcement apparatuses of nation-states.     

6.  Tribes voluntarily combined to form modern nation-states.

As mentioned earlier, Hazony claims that nations are formed by tribes that voluntary combine.  Economic historian Mark Koyama thoroughly debunked this claim far better than I could have, so please read his review.  My only additional comment on this is that a thorough listing and description of all the historical situations where Hazony’s claim does not hold would fill many, many volumes and describe the history of virtually every country.  

We are living in a time of renewed nationalism.  Whether this is a temporary blip or a long-term shift remains to be seen, but there is a scarcity of modern books, articles, or other writings that can competently explain that political ideology and make the case for it.  Hazony’s book fails for many reasons, but his insistence on defining nationalism in such a specific way that excludes virtually all nation-states that have ever existed should be a big red flag to anybody interested in this topic.

The latest attack on international institutions by the Trump administration distinguishes itself by being quite obscure: It’s about postage. It also may have more of a basis than most of the administration’s complaints about trade. 

The administration is concerned about the Universal Postal Union (UPU), a specialized agency of the UN. The UPU was established by the Berne Treaty of 1874 and became a UN agency in 1948. The administration has taken issue with the “terminal dues” rates issued by the UPU, under which, the administration argues, the United States has been subsidizing the shipping costs of foreign suppliers in certain countries, including China, when they send goods to the United States. The basic story is as follows (some good background is here).

When companies or individuals ship goods abroad, they use their domestic postal service to send the item. When that item arrives in the foreign country, the postal service of the shipping country makes a payment to the postal service of the destination country in the form of “terminal dues.” These “terminal dues” are set by the UPU and are designed to cover the destination country’s portion of the transportation costs – basically an agreed upon reimbursement rate to transport the item to the recipient.

The Trump administration’s concerns relate to the “terminal dues” rates set through the UPU for less wealthy countries, such as China. These countries’ rates are set very low, and do not necessarily cover the actual costs of shipping (and are sometimes significantly less than the rate American companies pay to ship within the United States). What this means in practice is that American taxpayers are sometimes subsidizing the transport costs of American companies’ foreign competition. It appears, then, that there is some legitimacy to the administration’s concerns about unfairness. 

Of course, as is often the case with the Trump administration, its approach to the problem is confrontational and perhaps risks inflaming tensions. The administration has, yet again, decided to use a threat of withdrawal from a treaty as a negotiating tactic, taking steps to withdraw from the UPU. Perhaps the withdrawal threat will force quick action to change the fee structure at the UPU, although there are some risks. Pulling out of the treaty would give the United States the flexibility to set our own transport rates, but it would also mean that we lose the power to stop others from charging us higher rates in return, while doing away with a mechanism that was designed to reduce, and streamline, transaction costs. In essence, the administration’s approach could lead to a postal “trade war.”

Are there alternative approaches? A Bloomberg editorial board piece sets out what they think may be a workable solution: having the administration look for a compromise on a postal rate during the broader trade negotiations with China. Of course, there would have to be some negotiations going on for this to work.

If it weren’t for all of the other aggressive trade actions taken by the Trump administration, this issue might be more easily addressed. Because it is part of a larger package of contentious moves, it might get lost in the mix of all the real and perceived trade slights the administration is complaining about. In calmer times, this might be a simpler problem to fix.

Thanks to Logan Kolas for research assistance with this post.

In my opening post about Scottish banks’ suspension of specie payments, I explained that, although the suspension was technically illegal, it failed to provoke any lawsuits in part because it was no less in the interest of many Scottish citizens, and Scottish bank creditors especially, than it was in that of Scottish bankers themselves. Rather than sue their banks, large numbers of prominent Scotsmen resolved publicly to make and receive payments in notes issued either by the Bank of England or by the Scottish banks themselves.

But while many Scots may have been willing, at least grudgingly, to accept bank notes rather than specie in payments, it doesn’t follow that none were harmed by the suspension. In today’s post I’ll consider just what the costs were, and who bore them. I’ll then turn in my third and final post to considering whether these costs should be regarded as a black mark against the Scottish bankers, and as a reason for denying that the Scottish free banking episode serves as a good example of the advantages of unregulated banking.

Gold versus Paper

The most obvious way in which holders of Scottish banknotes may have suffered from the suspension of specie payments would have been by finding that those notes were no longer worth their par value in gold, that is, that the cost, in banknotes and subsidiary coin, of an ounce of fine gold had risen above £3 17s 10.5d.[1]

It is, moreover, tempting to assume that the suspension led to an immediate and substantial decline in banknotes’ value, by eliminating what had been a crucial check against banks’ temptation to over-issue paper currency, thereby undermining the public’s confidence in it.

In the present instance, however, that’s not what happened. Instead the public, reassured by the British government’s promise that the Bank Restriction was to be a temporary measure only (and despite repeated extensions of the deadline for resumption), retained its confidence in paper currency to a remarkable degree. For its part the Bank of England continued to regulate its note issues as if specie payments hadn’t been suspended at all, no doubt in part because its directors also understood that they might be obliged to resume payments within a relatively short time. Scottish and English country banks in turn continued to be no less disciplined by the scarcity of Bank of England paper than they had formerly been by the scarcity of specie.

The upshot of all this, as can be seen in the chart below, is that a substantial portion of the Bank Restriction era banknotes, and Bank of England notes in particular, did not suffer any substantial loss of value relative to gold. Until 1808 the premium approached 10 percent on one occasion only — during the first quarter of 1801. Generally it was insignificant. (Even during the long stretch, between 1803 and late 1808, when the chart shows a constant 3 percent premium, gold’s market price was often lower, the 3 percent premium having been one that the Bank of England alone elected to pay at the time as a matter of its own peculiar policy.) “Month after month had passed away,” Henry Adams observes,

not only without bringing depreciation, but even rapidly increasing the stream of precious metals which flowed toward England, so that people were little inclined to dwell upon the dangers or temptations of restriction, and probably overestimated its value as a safeguard against panic.[2]

Following the 1801 spike, gold again fell close to par, from which it varied only insignificantly until 1808, thanks in part to the British governments’ willingness to limit its demands upon the Bank for wartime accommodation.

For some purposes, of course, and especially for that of paying for foreign goods, banknotes were no substitute for gold. But in that case, provided the particular need for gold could be demonstrated, the Scottish banks were often prepared to accommodate it, albeit quietly. “There is reason,” says William Graham,

to believe that cash [specie] payments were not stopped so entirely in Scotland as they were at the Bank of England. All the Scots banks kept stocks of gold, and it is probable that, notwithstanding the theory that the notes of Scotland turned out the gold, there was more gold in the country than was generally supposed, for the more prudent measures of the banks in their exchanges and issues could not fail to attract some of the gold which was displaced by excessive issues in England.[3]

In any case, gold could always be had in London and, to a more limited extent, in some other English markets, if not for its official price of £3. 17s 10.5d then for something not far from it. In that case, the main disadvantage consisted of transport costs amounting, in the case of shipments to Scotland, of between half and three-quarters of one percent of the purchase price,  plus a fixed insurance fee.

The Great Blockade

In the fall of 1808 circumstances changed radically, thanks mainly to the delayed effects of Napoleon’s Continental System, which had closed the European market to British exports two years before. For the first time gold commanded a substantial premium that peaked at over 40 percent during the last half of 1813. Under the circumstances — and the British government’s contrary official stance notwithstanding — it would be ludicrous to maintain that the public, whether in Scotland or elsewhere where the suspension remained in effect, continued to regard banknotes as equivalent to gold.[4]

Yet it would be a mistake to assume that the harm done to Scottish and other holders of banknotes and deposits was proportional to the extent to which the price of gold rose above its par value. By 1808 the “paper pound” had been an established fact for more than a decade, making it extremely doubtful that many contracts were still being entered into on the assumption that the payments called for would be made in anything save paper money and token coin. The “promise to pay” that every banknote bore was likewise understood to mean nothing more than a promise to replace one specimen or type of paper money with another.

Under these circumstances, it was only reasonable for merchants and laborers to determine what they regarded to be the right sums, not of gold but of banknotes themselves, to demand in exchange for their merchandise and labor, while allowing for the risk that paper would fall in value relative to gold. And it was likewise only reasonable for persons who deposited either silver or gold in a bank to determine whether the promised return — here, again, understood as a return likely to be paid in paper money  — was sufficient to make the deposit worthwhile. Finally, it was possible for  many who distrusted the paper standard to protect themselves by trading bank money for gold while it was still at or close to par, albeit by sacrificing the interest return banks promised them. In short, although there’s no doubt that many were caught short by the unprecedented post-1808 increase in the price of gold, and still greater increase in prices more generally, the overall losses attributable to that increase were presumably far less than those that would have ensued from an otherwise equivalent but immediate devaluation of a previously convertible currency.

Scotland’s Small Change Problem

The appreciation of gold after 1808 was, on the other hand, not the only source of anguish stemming from the banks’ decision to suspend specie payments. Besides denying bank liability holders ready access to gold at its official price the suspension denied them access to silver; and although gold rather than silver had been Great Britain’s de facto medium of account, it was lack of access to the less precious metal that proved particularly troublesome to many bank customers, and especially to merchants and manufacturers of all kinds. For those merchants and manufacturers needed small-denomination media with which to make change and pay their workers; and because banknotes were generally available only in larger denominations, they couldn’t serve the purpose even if they were still worth their nominal value in gold.

The problem was especially acute in England, where the smallest notes issued either by the Bank of England at the onset of the crisis were for £5 — a princely amount when you consider that the average wage worker was lucky to bring in 10 shillings a week, or one-tenth that amount! It was mainly owing to their fear of being deprived of means of payment suitable for their everyday needs, including gold guineas and half-guineas as well as smaller silver coins, that the English public panicked upon learning of the restriction. “It is no exaggeration to say,” writes William Graham, “that had the Bank of England at this time issued one pound notes…the storm would have been prevented.” The panic, he adds, “was purely a scarcity of a suitably small circulating medium in which the public could have confidence, and not a commercial crisis in any sense.”[5]

It was only after panic had set in, in March 1797, that the Bank first issued £1 notes, thereby helping to relieve the small-change problem and, ultimately, to bring more specie out of hiding and into its coffers. Eventually English and Welsh country banks, which had also been prevented from issuing notes of £5 or more, were also granted permission to issue £1 and £2 notes, thereby providing further relief. Coin remained necessary, however, for amounts below £1, causing numerous other expedients, including private tokens, to be resorted to in lieu of official silver coins.[6]

In Scotland the situation was better in so far as banks there were already allowed to issue £1 notes when the crisis broke out. Consequently the panic was largely limited from the start to a scramble for smaller-denomination silver coins. In Memoirs of a Banking-House, Sir William Forbes, who was then head of Forbes, Hunter and Co. (forerunner of the Union Bank of Scotland) offers a vivid account of the situation he and other Edinburgh bankers confronted then. The bankers having plastered the city with handbills and notices announcing their decision to suspend, the counting house of Forbes, Hunter and Co. at once found itself

crowded to the door with … fishwomen, carmen, street-porters, and butchers’ men, all bawling out at once for change, and jostling one another in their endeavors who should get nearest to the table, behind which were the cashier and ourselves endeavoring to pacify them as well as we could. … [W]e felt the hardship on the holders who were deprived of the means of purchasing with ready money the necessaries of life, as there were no notes of less value than twenty shillings, and it was with the utmost difficulty they could get change anywhere else; for the instant it was known that payment in specie were suspended, not a person would part with a single shilling that they could keep, and the consequence was that both gold and silver specie was hoarded up and instantly disappeared. …Saturday was the day on which we had the severest outcry to encounter; for on that day we had always been accustomed to the largest demand for silver to pay wages.[7]

“The banks,” William Graham writes, “were besought to issue smaller notes than for one pound,” but were prevented from doing so by the Bank Notes Act of 1765. Instead “recourse was had to tallies, tokens, and sometimes even to tearing a twenty-shilling note into quarters, for which the bankers afterwards freely paid the proportional sum.”[8]

But in March Parliament, having relieved the situation in England and Wales somewhat by allowing banks there to issue £1 notes, in turn brought relief to Scotland by suspending the provision of the 1765 Act outlawing Scottish bank notes for less than that amount. Before long, substantial quantities of banknotes worth as little as 5 shillings had fully met Scotland’s demand for small change, bringing the Scottish panic to an end, and eventually causing large amounts of silver coin that had disappeared into hoards returning to circulation, if not to Scottish bankers’ coffers. According to Sir William Forbes,

It was remarkable…after the first surprise and alarm was over, how quietly the country submitted, as they still [1803] do, to transact all business by means of bank-notes, for which the issuers give no specie as formerly.  The wonder was the greater, because the act of the Privy Council first, and afterwards the act of parliament, applied merely, as I have already said, to the Bank of England, while all other banks, both in England and Scotland, were left to carry on their business without any protection from parliament, and without any means of obtaining specie beyond what the natural course of business brought into their hands from the circulating in the country. That source, however, has hitherto proved amply sufficient for all needful purposes (my emphasis).[9]

***

With the facts concerning the causes and consequences of the Scottish suspension before us, we’re now prepared to consider the extent to which that suspension ought to be regarded as a black mark against the Scottish free banking system, if not against freedom in banking more generally. I’ll address that topic in my third and final post in this series.

_______________________

[1] Although Great Britain did not officially switch from bimetallism to a gold standard until 1819, a de facto gold standard is generally understood to have prevailed there since the opening decades of the 18th century when, by assigning gold guineas an official value of 21s Isaac Newton caused gold to be legally overvalued at the Royal Mint relative to silver.

[2] Henry Adams, “The Bank of England Restriction. 1797-1821,” North American Review, Vol. 105, No. 217 (Oct., 1867), pp. 402-3. Reprinted in Charles Francis Adams Jr. and Henry Adams, Chapters of Erie, and Other Essays (Boston: James R. Osgood and Company, 1871), pp. 224-68.

[3] William Graham, The One Pound Note in the Rise and Progress of Banking in Scotland (Edinburgh: James Thin, 1886) p. 123.

[4] Yet Nicolas Vansittart denied it nonetheless, by moving a resolution in Parliament in 1811 to the effect that the public then considered banknotes to be equivalent to gold. By so doing he made a laughing stock of himself. Still that didn’t stop Parliament from passing the resolution.

[5] Graham, op. cit., p. 115.

[6] For the story of the private tokens issued during this period see my Good Money: Birmingham Button-Makers, The Royal Mint, and the Beginnings of Modern Coinage, 1775-1821 (Ann Arbor and Oakland: University of Michigan Press and the Independent Institute, 2008).

[7] Sir William Forbes, Memoirs of a Banking-House (London: William and Robert Chambers, 1860), p. 81.

[8] Graham, op. cit., p. 116.

[9] Forbes, op. cit., p.85.

[Cross-posted from Alt-M.org]

One concern about the caravan of Central American migrants making its way to the U.S. border is that it may contain criminals. Although we don’t know the identities or criminal histories of the actual people in the caravan, we can get an indication by looking at estimates of the incarceration rates of immigrants in the United States who come from the Central American countries where the caravan originated.

Hondurans are likely the largest contingent in the caravan. The Honduran incarceration rate in the United States was 1,130 per 100,000 Hondurans in 2016 (Figure 1). The incarceration rate of native-born Americans is about 25 percent higher than for those born in Honduras at 1,498 per 100,000 natives. In 2016, the incarceration rate for immigrants from all of Mexico and Central America is about 35 percent below that of native-born Americans. 

Figure 1: Incarceration Rate by Nationality of Birth Per 100,000, Ages 18-54, 2016

Figure 1 controls for the size of the population to create a meaningful comparison of incarceration rates between the national-origin groups. For instance, the incarceration rate for American natives is 1,498 per 100,000 American natives and the Mexican incarceration rate is 996 per 100,000 Mexican-born residents in the United States. The incarceration rate for all immigrants from Mexico and Central America was 970 per 100,000 immigrants from that part of the world.    

The data for the estimates in this blog come from the 2016 American Community Survey (ACS). These are estimates from the group quarters population for those aged 18-54. Figure 1 is an estimate because not all inmates in group quarters are in correctional facilities. Most inmates in the public-use microdata version of the ACS are in correctional facilities, but the data also include those in mental health and elderly care institutions and in institutions for people with disabilities. As a result, we narrowed the age range to 18-54 to exclude most of those in mental health and retirement facilities. 

Commenting on the likely criminality of members in the migrant caravan based on the incarceration rates of their co-nationals in the United States is not fully satisfying. People in the migrant caravan could be more crime-prone than their fellow countrymen in the United States, for instance. However, the incarceration rates of their fellow countrymen in the United States at least provide some evidence to cut through the political statements made without any evidence.    

Most of the members of the caravan will likely seek asylum in the United States while the others will try to enter unlawfully. The government will vet the asylum-seekers to identify serious criminals and national security threats. However, it is impossible to vet those who enter as illegal immigrants – which is one of the better arguments for allowing them to enter legally as they would then be subject to vetting.

Special thanks to Michelangelo Landgrave from crunching many of the numbers for this post.

This weekend, I appeared on C-SPAN’s Washington Journal alongside Families USA’s Frederick Isasi to discuss “the role of health care  in the 2018 mid-term elections.” Specific topics were covered include Cato’s latest health care book, Overcharged: Why Americans Pay Too Much For Health Care; the recent vote by Senate Democrats that would have thrown patients with preexisting conditions out of their health plans and left them with no coverage; how ObamaCare’s preexisting-conditions provisions are unpopular and reduce quality; how markets make access more secure for the sick than employer-sponsored plans; the benefits and costs of short-term plans; the Veterans Health Administration; the single-payer two-step; and how ObamaCare supporters want to take away your freedom to choose your health benefits. 
 

Prepare yourself for the greatest 55 minutes and 30 seconds of your life.

Last week, NPR.org published a story entitled “D.C.’s Aggressive Confiscation of Illegal Guns Leaves Residents Feeling Targeted.” The report explains how the D.C. Metropolitan Police Department (MPD) is particularly adept among major cities at getting illegal guns off the streets, but a recent uptick in gun violence has ramped up efforts of their Gun Recovery Unit (GRU). The aggressive tactics of the GRU—using what locals call “jump-out cars” to stop and search individuals for weapons—contribute to the longstanding animosity between some community residents and the police.

While it is true that, per capita, D.C. leads other cities in gun confiscation, the high number of recovered weapons only tells part of the story. That is, what MPD did and the numbers of stops they made to recover that many weapons are part of a larger problem of harassment and distrust in the community. The MPD is quick to point to D.C.’s 44 percent increase in homicides since last year as the justification for their policy, but it’s uncertain as to whether “jump-out” tactics will help at all.

Aggressive and invasive police stops can lead to recovering firearms and other contraband from individuals, but there is no statistical evidence that ties those tactics to decreases in crime rates or violence. Indeed, as described in recent testimony in Little Rock, Arkansas, evidence shows that a heightened visible police presence can have positive effects on crime rates and violence in affected areas without the use of invasive stops.

Another problem with MPD policy is whom in particular the GRU is stopping. The jump-out cars are not used equally throughout the District. Indeed, friend of Cato and now-retired judge Janice Rogers Brown had some harsh words about the GRU in a 2015 case before her in the U.S. Court of Appeals for the D.C. Circuit:

As a thought experiment, try to imagine this scene in Georgetown. Would residents of that neighborhood maintain there was no pressure to comply, if the District’s police officers patrolled Prospect Street in tactical gear, questioning each person they encountered about whether they were carrying an illegal firearm? Nothing about the Gun Recovery Unit’s modus operandi is designed to convey a message that compliance is not required. While viewing such an encounter as consensual is roughly equivalent to finding the latest Sasquatch sighting credible, I submit to the prevailing orthodoxy, but I continue to reject its counterintuitive premise. (Brown, J. concurring, U.S. v. Gross 784 F.3d 784, 790 (2015))

Although she never mentions race once in her opinion, Judge Brown all but dared the MPD to try this method of policing in Georgetown—a posh, predominantly white residential and shopping district—instead of Southeast D.C., where GRU operates and the residents are predominantly poorer and black. She likens the idea that Georgetowners would think such treatment would be fair to the likelihood of seeing Bigfoot, but because the politicians and the courts have tolerated these heavy-handed tactics mostly used in poor black areas, they remain legal.

Indeed, as Jessie Liu, U.S. Attorney for the District of Columbia, told NPR, “I think that both the police department and our office are doing a great deal to train on what the legal requirements are.” But legality and propriety are often not one in the same. As one resident testified at a public hearing on the GRU tactics, the police “look at everyone in the community like [they are] villains.” While it is true that Georgetown and Southeast D.C. have different problems, each area’s residents are entitled to the same respect and treatment by police officers.

Perhaps most crucially, curbing illegal gun possession requires understanding why these individuals are carrying guns in the first place: fear. Putting aside the imprudence of carrying an illegal gun while fearful and lacking proper training, even tough-on-guns police executives admit that the fear of being killed is a major driver of these illegal gun possession cases. In 2017, nearly 45 percent of homicide victims were black men, and data shows homicides generally cluster in low-income areas of medium-to-large cities. A young black man in Southeast D.C. may have good reason to fear for his safety and security, and when the police have deemed themselves untrustworthy through their policies and actions, carrying an illegal gun may appear to be a reasonable—though reckless, flawed, and desperate—option.

By targeting people for searches based in part on where they live—and the same people resent the police and justifiably fear for their lives—it’s hard to see how MPD expects to either reduce crime and foster cooperation by using the GRU and its tactics. The rift between these communities and the police poses a problem when police are trying to solve crimes of tragic violence. Local activist Jay Brown told NPR, after the shooting death of a 10-year-old girl this summer, that the relationship between the community and police is so bad that, “We can’t even trust the police. [I]f anybody does know anything about what happened…they’re not going to talk to the police [because] it’s just like talking to another gang.”

And, thus, the vicious cycle continues.

Of course, both police and communities want to lower the murder rate—no one wants the killing to stop more than the people who live in the areas suffering the highest violence—but those desires don’t excuse each and every means the police contrive to find illegal guns. Antagonistic interactions between police and the public have real costs, and the stated intent of quelling gun violence does not make those costs disappear. If the police violate the trust of the community by shaking down and mistreating community members—even if it’s technically legal to do so—they risk the community’s cooperation when people get hurt. This lack of cooperation can enable the most violent offenders to go free, defeating the goal the police are trying to achieve.

The police need the public’s trust to be effective at deterring and solving crimes. It doesn’t make sense for them to direct the GRU to violate that trust and then expect the community to respond well. That’s not how trust works.

Before President Trump nominated now-Justice Brett Kavanaugh to fill Justice Anthony Kennedy’s Supreme Court seat, I wrote a piece about Judge Amul Thapar, a top contender for the seat who may yet find his way onto the Court. Thapar is on the Cincinnati-based U.S. Court of Appeals for the Sixth Circuit and is a judge who has displayed a deep understanding of our founding principles. He’s also a clear writer with a fondness for movie references. Two of his recent opinions illustrate his commitment to individual liberty and due process through a nuanced, contextualized view of the Constitution.

Morgan v. Fairfield County concerned a “knock and talk,” where county policy involved forming a police perimeter around a suspect’s house while one officer attempts to talk to the residents. One of the perimeter officers behind the house saw marijuana plants on a balcony, pursuant to which the police eventually secured a search warrant. The majority found that the county’s “knock and talk” policy directed the officers to conduct a warrantless search – that forming the perimeter involved invading the “curtilage” of someone’s house – and so the county could be held liable for a Fourth Amendment violation (though the officers had qualified immunity because they were just following standard policy).

Judge Thapar dissented in relevant part, arguing that while the officers did have qualified immunity if all they were doing was preserving officer safety or preventing the destruction of evidence, the county’s policy itself did not direct the officers to conduct a search. Accordingly, there was no constitutional violation unless the police actively searched while they formed their perimeter. Looking at the history of the Fourth Amendment, Thapar defined a search as a “purposeful investigative act.” He argues that the Supreme Court muddies Fourth Amendment protections by describing them as relating to a reasonable expectation of privacy, rather than to the reasonableness of a search. That gives too much wiggle room to police and courts alike, as judges struggle to define subjective expectations of privacy. Thapar maintains that the question should instead be whether officers engaged in a purposeful investigative act – and indeed would have remanded the case for a determination of that issue. This would simplify the analysis and allow courts to apply the original meaning of the Fourth Amendment to the facts before them. 

If Morgan puts Judge Thapar’s intellectual chops on display, then Doe v. Michigan showcases the effectiveness of his vibrant writing style. Here, a fraternity boy (“John Doe”) and sorority girl (“Jane Roe”) at the University of Michigan drank and had sex at a party. Roe filed a report, claiming she was too drunk to consent. Doe said the sex was consensual and he didn’t know she was intoxicated. He introduced witnesses, all of whom were his male fraternity brothers, and she brought her own, all female, most of whom were her sorority sisters. The two sets of witnesses presented two conflicting stories. The school was at an impasse, ultimately deciding in favor of Roe. Doe filed a claim against the school, citing due process violations.

The Sixth Circuit has established that in a public university disciplinary hearing where credibility is at issue, the accused must have an opportunity to cross-examine witnesses. Judge Thapar thus writes for the court that, since the case turned on Roe and her witnesses’ credibility, Doe had a right to cross-examine. Cross-examination, he argued, allows us to determine the truth when the accuser’s story sounds as plausible as the accused’s version of events. The accused has the chance to reveal inconsistencies in a witness’s story, and the trier of fact can evaluate someone’s demeanor. In a footnote, Thapar cited A Few Good Men and My Cousin Vinny as examples of why, even in pop culture, cross-examination is so highly regarded; it can be incredibly effective to “both undermine and establish the credibility of witnesses.”

The clarity of Judge Thapar’s opinions demonstrate his effectiveness as an originalist. Not only does he rely on the liberty-protecting context surrounding constitutional text to determine its proper meaning, but he applies it to the facts with style. He merits his place on a future Supreme Court short list.

Cato legal associate Patrick Moran contributed to this blogpost.

The Wall Street Journal takes the Trump administration to task this morning, and rightly so, over a proposed rule from Health and Human Services to impose price controls on what Medicare Part B pays for certain drugs. The rule would set the prices HHS pays at 126% of what other developed countries pay, down from 180% today.

Why do Americans pay so much more for drugs than foreigners? That’s the question that’s driving this proposal. The simple answer is that compared to foreign countries with their price controls under single-payer health systems, the U.S. still has a relatively free drug market. But the issues underlying that answer are anything but simple. In recent years they’ve swirled around proposals to end U.S. restrictions on “reimporting” cheaper drugs from Canada and Europe, which would amount to reimporting foreign price controls, critics rightly argue, and hence to reducing incentives to invest in years of expensive research and development. I’ve addressed those issues in detail in a 2004 Cato Policy Analysis and in the Wall Street Journal here and here. This new proposal is more of the same, in different garb.

In a nutshell, the miracle drugs that have so revolutionized modern medicine don’t come cheaply. On average it takes a billion dollars and 15 years of research and development to meet FDA safety and efficacy requirements, which most new drugs fail. But once a drug succeeds, the second pill costs pennies to produce, which is why patents are so crucial, failing which no one would invest in such risky ventures. When companies look at the world, however, they see socialized systems imposing price controls—except in America. So they charge market prices here (half the world market) and take what they can get abroad. What that means, of course, is that American’s pay the lion’s share of R&D costs while foreigners get drugs “on the cheap,” and therein lies the political problem here and the call for reimporting “cheaper” drugs from abroad.

It’s more complicated still, however. Given different levels of demand abroad, companies segment markets and price differentially. But that means they have to guard against not only reimportation but “parallel markets”—local vendors in low-price markets reselling to high-price markets at a discount—or all the drugs will end up in low-price markets, only to be resold to high-price markets, undercutting companies’ profit-making venues. They can try to preserve their market segmentation with no-resale contracts and supply limits. But those contracts are illegal in Europe from a mistaken belief that they’re anti-free trade, which is why there’s a thriving parallel market there. And since proposals in Congress to lift the ban on reimportation here have included bans on no-resale contracts and supply limits abroad, companies have understandably fought them.

This new HHS proposal is not as far-reaching as the earlier reimportation proposals, but the implications for future drug R&D investment are the same. As the Journal writes, “any investor who wants to bankroll the cure for Alzheimer’s is already staring at a very small chance of success—and the Trump HHS proposal adds another potential limit on return,” likely driving investment “into less difficult drug categories” or into other ventures altogether. Government funded drug R&D might not then be far behind. That would further politicize the development of drugs, much like European formulary limits do by rendering unavailable many of the modern miracle drugs we Americans enjoy.

Both are consistent with free market principles. Back in 1987, however, drug companies took a short cut: they asked Congress to ban drug reimports. They won a statutory, public law solution to a private law problem, and therein lie difficulties.

In effect, third-party Americans were told they couldn’t buy from willing foreign sellers. (In fact, Canadian provincial officials are actually encouraging local pharmacies to resell to Americans.) Thus, by opposing reimportation, the administration comes off as anti-free trade. Americans resent the price differences and the interference — especially those who understand the free-rider issue.

What’s to be done, then? Clearly, the situation today is politically unsustainable, as events are proving. The ban should be lifted, therefore, not to encourage reimportation, which isn’t likely to happen, but simply to allow market practices to surface. Today, with their high-profit American market protected, companies don’t have to bargain hard abroad. The ban shields them, allowing them to claim they have to accept foreign price controls. Practically, Americans are subsidizing socialized medical systems abroad.

But with the ban lifted, and the threat of underpriced drugs flooding the American market, companies would be “forced” to adjust. They could still try to maximize profits by segmenting markets. But they’d have to guard against parallel markets the right way, through no-resale contracts or supply limits. They could offer a country lower prices, but the country would have to police its exports, since America would no longer be policing imports. That places the incentive where it belongs, on the country benefiting from the bargain. And if that failed, companies could limit supplies, as they’re doing now with Canada.

In Europe, however, no-resale contracts are illegal — from a mistaken belief that they’re anti-free trade. That’s why there’s a thriving parallel market there. If that’s the way Europeans want it, companies will have no choice but to limit supplies or raise prices. That’s how markets work. Companies should be free to segment markets. But if it doesn’t work, international prices will move toward equality. And if that happens — as is likely, given enforcement difficulties — there’ll be no reimportation, which moots the safety issue as well.

With the ban lifted, no one knows whether prices will rise abroad and fall here, or just rise abroad. That’s for markets to decide. The last thing we want, however, is the bipartisan Dorgan-Snowe Senate bill, which would lift the ban and then prohibit companies from “gaming the system” — limiting supplies or raising prices abroad. In effect, the sponsors want to freeze the current situation, then import below-cost drugs from abroad — at those prices. The sponsors seem not to appreciate that the only reason a company can sell a drug for $20 in Germany is because it’s sold for $100 in America. The bill would actually import foreign price controls, and that would be the end of future R&D and the miracle drugs it produces.

Opponents of lifting the ban say that if we “forced” market practices on the world, countries would balk at paying those prices and would steal American patents. But a close reading of the WTO Trips Agreement, protecting intellectual property, should allay those fears. The administration needs to watch the issue, however; and in treaty negotiations it should encourage a clear separation of commercial and charitable undertakings. In particular, the “compulsory licensing” arrangements designed to help poor countries with their drug needs should be scrapped in favor of a more market-oriented approach to this problem.

Drug reimportation is thus more complex than at first it seems, but as with so many other issues on the public’s plate today, a healthy dose of market principles is the right prescription.

Picking up on Vice President Mike Pence’s speech at the Hudson Institute several weeks ago, Hudson’s Seth Cropsey detailed a plan in the Wall Street Journal on “How to Win a Cold War with Beijing.” At the center of Cropsey’s op-ed is a dramatic increase in the U.S. presence in Asia that would require, among other things, accelerating the current naval buildup, increasing naval patrols, and bolstering naval and Marine forces in Australia. In effect, Cropsey wants to apply the strategy that helped end the former Cold War to America’s growing conflict with China. Quoting Ronald Reagan, Cropsey explains “The objective in this strategic competition [is] ‘We win, they lose.’”

Cropsey’s approach, however, is based on several flawed assumptions, including about the inevitability of conflict between the United States and China. He also places undue faith in the United States’ capacity to face down its rising rival by building more warships and deploying them close to China’s shores.

Implicit in Cropsey’s call for a large naval arms race with China is the assumption that China will back down in the face of it. Convinced of the futility of such competition, Cropsey appears to believe, the Chinese will simply accede to our demands, including on Taiwan. But I have seen no evidence to support such an assumption. The more likely result of an arms race is…a further arms race, as my colleague John Glaser explained earlier this year. Cropsey also ignores the fact that the world is moving into an era of defense-dominance, which puts America’s exquisite, but enormously costly, naval platforms at increased risk from small, smart, and cheap weapons.

The current Sino-U.S. competition is unlike any we’ve seen – at least in a very long time. The Cold War was, in large part, a zero-sum fight between two diametrically opposed ideologies. However, whereas Soviet Communism and Western Capitalism couldn’t coexist, China’s and America’s current systems can. Or at least might.

If you doubt that, consider that Americans have helped to lift hundreds of millions of Chinese out of desperate poverty over the last quarter century through trade, greatly enriching China in the process. That wasn’t the intention, per se; as Adam Smith famously explained, trade is driven by mutual “self-love.” “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner,” he wrote, “but from their regard to their own interest.” 

And, even now, as President Trump wages a trade war with China, he’s not seeking to end trade between the two countries, but rather to have it on terms more favorable for Americans. Whether he can pull that off is an open question, as Dan Ikenson recently noted, but the end result could be an even greater degree of economic interdependence than already exists.

Contrast that possibility against the reality of U.S.-Soviet trade relations. Actually, you can’t; there was hardly any economic exchange between the two superpowers during much of the Cold War. Most Americans during the darkest days of that standoff wouldn’t have been caught dead buying Soviet-made goods – and not just because they were of dubious quality. At another level, doing so would have been seen as treasonous, literally trading with the enemy.

Cropsey’s plan overlooks another critical difference between the Sino-U.S. conflict and the Cold War: the Soviet Union was a declining power; China is rising. We can’t compete in the same way today as we did in the 1950s and 60s, engaging in an arms race that eventually grinds the other side into the dirt – or drowns them in the sea. On the current trajectory, I’m sad to say, we’d drown first.

Cropsey fails to account for this possibility by ignoring the United States’ crushing fiscal imbalance. I’m not merely referring to the current-account deficit, which passed $779 billion in the last fiscal year, the highest level since 2012, but also the long-term crisis caused by out-of-control spending on Social Security, and, especially, Medicare. Awkwardly for Cropsey, his call for accelerating an already dramatic expansion of the U.S. Navy appeared on the very day that the Trump administration called for cutbacks in military spending precisely because of the yawning deficit.

By contrast, Cropsey offers no suggestions for what other spending must be cut, and what taxes increased, to cover the cost of his proposed military buildup. Instead, he is essentially assuming that these spending increases will be paid for by additional debt – while ignoring that the very country we are arming against is the largest foreign holder of such debt.

America should not ignore an increasingly assertive China, and that includes calling attention to bad behavior. I thought it noteworthy, for example, that Vice President Pence called out China’s shameful human rights record, including the ongoing persecution of Muslim Uyghurs. The crackdown on peaceful political dissent in also troubling. More broadly, U.S. policymakers must consider novel approaches to territorial disputes in the South and East China Seas without privileging any one claimant. Indeed, Washington should always take account of the perspective of other countries in the region. Notably, none are calling for the kind of military confrontation that Cropsey favors – and a number, including most recently Japan, are doing the opposite by actively exploring deeper trade and diplomatic ties with Beijing.

Closer to home, it is in our interest to develop policies and procedures that protect intellectual property and our sprawling cyber infrastructure. This may mean considering what regulations can and should be imposed on Americans that would like to do business in China, or with Chinese firms. I would prefer, however, that Americans rethink how they safeguard their precious assets without politicians in Washington, DC, having to tell them to do so.

A long-term strategy for Sino-US relations should be forward looking, and based on present realities, not on outdated thinking and false assumptions. Most importantly, the United States should work with China to find diplomatic solutions to those issues that could lead to war (including the toughest issue of all - Taiwan). We should seek solutions that advance U.S. interests, but also contributes to long-term peace and stability in the region.

The alternative to a win-win is that we both lose.

p.s. If you want to hear more on U.S.-China relations, and reactions to the Pence speech, check out my conversation with Bryan McGrath (@ConsWahoo) and Melanie Marlowe (@profmarlowe) at “Net Assessment,” War on the Rocks’ newest podcast.

Thanks to Travis Evans for his help with this post.

Recently I’ve received some criticism on my position on paid leave as outlined in Parental Leave: Is There a Case for Government Action? In my report, I provide evidence that the private market is providing a growing amount of paid leave over time and I suggest that providing paid leave through a government mandate or social insurance program is likely to include a variety of trade-offs and/or may not meet some of advocate’s purported objectives.

Although Nathan J. Robinson’s criticism of my report is steeped in vitriol, it still provides an opportunity to clarify my position. If I had to boil his critique down to one or two major criticisms, it would be that, in his view 1) I did not include a representative discussion of the benefits of creating a government paid leave program (and some of these benefits are mentioned in papers I cite for costs) and 2) I do not take the same position as certain academics I cite.

To the first point: Although not obvious from the paper, when I speak about paid leave publicly, I almost always first state that paid parental leave holds benefits for companies and parents and I am in favor of businesses voluntarily providing paid leave.

Moreover, voluntarily provided paid parental leave arguably holds greater benefits for parents than government supported or mandated leave, because employers incorporate the costs and benefits of leave-taking into their business model and therefore have reduced incentives to discriminate against likely leave-takers, including childbearing-age women. 

Why focus this paper on government supported leave’s trade-offs? First and foremost, because research groups and news outlets have spilled untold amounts of ink describing possible and likely benefits of government supported paid leave elsewhere. Those benefits are mostly well-known in policy circles and easily understood.

The main contribution of this paper is to challenge the prevailing view that government benefits could be realized without costs or trade-offs to workers (and indeed, workers’ lives may not be “markedly improved” after all, once associated trade-offs are taken into account). Indeed, the paper is intended to bring some balance to the existing debate by outlining trade-offs that are rarely seriously considered.

The paper is not a comprehensive review of the paid leave literature. However, it does carefully and accurately relay findings from the paid leave literature on potential costs and trade-offs of government intervention.

The second criticism–that I do not share all the same views on paid leave as academics I cite–does not make sense. Think tank scholars and academics cite other scholars all the time whom they disagree with on many points. 

As always, I enjoy hearing thoughtful criticisms of my work but the Current Affairs’ critique is off the mark. Moreover, by selecting two Cato studies and drawing conclusions about the whole of Cato research, Robinson commits one of the logical errors he spends so much time deriding: cherry-picking.

Harvey. Irma. Maria. Michael.  Four strong (category 3 or higher) hurricanes in 14 months. Something is happening, right?

When category 4 hurricane Harvey banged into Rockport, Texas, and then decided to hang around for five days visiting the fine folks of Houston and vicinity, it broke the 11.8 year “hurricane drought”, by far the longest period in the record without a major (category 3 or higher) landfall.[1],[2] Because of its unfortunate stall, Harvey also broke the record for a single-storm rainfall in the U.S., with 60.58 inches at Nederland, Texas.

What about a human influence from dreaded carbon dioxide? The National Oceanic and Atmospheric Administrations (NOAA) Geophysical Fluid Dynamics Laboratory (GFDL) dryly stated on September 20:

In the Atlantic, it is premature to conclude that human activities–and particularly greenhouse gas emissions that cause global warming–have already had a detectable impact on hurricane activity.

This was from a GFDL publication “Global Warming and Hurricanes”.  This is a frequently revised publication designed to keep readers current with the evolving scientific literature on the subject, but the statement about prematurity has been in the document for many years.

But wait. Everything else being equal,[3] (“EEBE”) hurricanes—and their generic name, tropical cyclones—acquire their energy from warm water, and, globally, sea surface temperatures (SSTs) are around 0.5°C warmer than they were when the data become reliable around 1880.  There was a decline of around 0.3°C from then to the low point in the record, around 1910, which means from bottom to top (1910 to 2016) there’s a change of around 0.8°C for the past 100 years or so.

There’s usually not enough energy to fuel a tropical cyclone if the ocean’s upper layer temperature is less than 26.5°C which limits their “seasons” to the late summer and early fall in each hemisphere, with the exception of the western Pacific, where there’s enough warm water to spin up storms year-round, although the maximum occurs at nearly the same time as it does in the North Atlantic. Owing to climatologically cooler temperatures, there are very few tropical cyclones in the South Atlantic.

Beyond the threshold, increasing the oceanic heat content (i.e. the vertically integrated temperature) should, EEBE, increase either the number of storms (holding their power constant), or their power (holding the number constant).

Meteorology wizard (and Cato adjunct scholar) Ryan Maue’s relatively recent PhD from Florida State was squarely over the bridge between tropical and temperate-zone storm climatology. Ryan knows hurricanes, and, beginning in grad school, has generated the comprehensive history of global tropical cyclone power.   Although some tropical cyclones occur in pretty remote places, the onset of global weather satellite coverage in 1970 means his record is largely complete

Obviously EE is not E.  Despite an SST rise of nearly 0.5°C since 1970 and a global surface temperature rise of around 0.65°C[4], there’s simply no warming-related trend in tropical cyclone power:

Figure 1.  Maue’s Accumulated Cyclone Energy (ACE) Index shows no changes that can be related to overall temperature trends since 1970.  Figures are 24-month moving averages.  The top circles are for the globe, and the bottom ones for the Northern Hemisphere.  If you’re paying attention, the space between the two gives the ACE index for the Southern Hemisphere.

As Roy Spencer (www.drroyspencer.com) recently has shown, there’s been a decline in the number of category 3 or higher storms hitting the coterminous US.

Figure 2.  Roy Spencer’s plot of major (category 3 or higher) hurricanes hitting the lower-48 states. Note that there’s still two years to go for the decade beginning in 2011.  There certainly could be more by 2020; if we take the historical average frequency of major hurricane hits and add that in, there’s nearly a 50-50 chance that the actual number will be four instead of three.  Does not include two strikes in Puerto Rico (Cat 4 Maria last year and Cat 3 Hugo in 1989).

Historical Perspectives

The 2014 “National Assessment of Climate Change Impacts on the United States” made a big deal out of a seemingly large increase in the hurricane Power Dissipation Index.  The principal difference between it and Maue’s Accumulated Cyclone Energy index is the PDI uses the cube of the wind speed while the ACE index uses the square.  The National Assessment highlighted a rise from 1980 through 2009.  But the authors certainly had data through 2013 at their disposal. 

There is also is another record of Atlantic hurricanes back to 1851, called HURDAT and put together by the National Oceanic and Atmospheric Administration’s Hurricane Research Division.  Prior to satellites (pre-1970) and aircraft reconnaissance (beginning in World War II), it would likely to have missed some storms, but HURDAT is about a complete a record as can be generated.  Further, any errors in it are likely to be omissions of storms rather than calling ones that actually didn’t exist.

Ryan Maue used HURDAT and calculated the PDI back to 1920, and his analysis shows that the 2014 National Assessment picked a rather prominent cherry when it decided to emphasize the 1980-2009 rise.  

Figure 3.  North Atlantic hurricane Power Dissipation Index (PDI).  Despite being published in 2014, the most recent National Assessment emphasized the period 1980-2009, displaying an upward trend line during that time.   It’s quite clear that the increase from the 40s to the early 60s is quite similar to what was displayed in the Assessment.  

Roy Spencer recently looked at the frequency and windspeed of landfalling Category 3 or higher storms striking Florida. There’s obviously no trend, either in intensity or in frequency. 

Figure 4.  Category 3 strikes in Florida since 1900, along with highest sustained winds.  Maximum gust speeds are higher. Category 3 hurricane Matthew in 2016 is not listed as the center never crossed the coast—but the Cape Canaveral area was very close to the western eyewall, and experienced considerable damage.

Hurricane Damages

Colorado State’s Phil Klotzbach and three co-authors recently published what should be the last word on U.S. hurricane frequency and damages. One of the co-authors was University of Colorado’s Roger Pielke, Jr., who contributed a plot of what he calls “normalized hurricane damage”, which essentially projects current property values onto past hurricanes.

Again, there is no significant trend. 2017 had the third-highest normalized damage total in the continental US (note that does not include Puerto Rico), around $130 billion.  That pales, compared to 1926, when total damages would have been around $230 billion for today’s property values.

All in all, recent hurricane activity isn’t particularly remarkable.  Following a record 11.8-year major hurricane drought, recent activity is surely impressive, but imparts no overall trend when viewed in terms of the entire record since 1900.  Further, Maue’s global accumulated cyclone energy, going back to 1970 (the start of global weather satellite coverage), shows no relationship to global surface temperature.  2018 appears to be a record for activity (not number) in one basin—the Eastern North Pacific, but, again, that isn’t going to impart a trend.

[1] Adjusting the damage costs for inflation, and property values, Harvey was the third most costly hurricane, at $125 billion.  The Great Miami Hurricane of 1926 takes the prize, at $210 billion, with 2005 Katrina at $168 billion.  Data from Klotzbach et al. (cited below) and NOAA. Reliable estimates for damages extend back to 1900.

[2] The record goes back to 1851.  The second-longest period was nine years and one month, from 1860 to 1869.   That may be a bit suspect because contained within is the only three consecutive-year period without any landfall of even a Category 1 storm.  That was 1862 through 1864, when the nation may have had a bit more to do than count hurricanes.

[3] Perhaps the most dangerous words to use when speaking climatically.  The atmosphere is an integrated fluid over a rotating, highly heterogenous surface composed of liquid water, land, ice and snow. Everything else is never equal, and the atmosphere is never at rest.

[4] Data from the Climate Research Unit at the University of East Anglia.  There’s a low point in the record that occurs in the mid-1970s, thanks to a slight cooling from 1945-75.

“Where do we have tariffs?” President Trump asked yesterday. One obvious answer is on imported clothing and footwear, where tariffs are both substantial and hit low-income consumers hard.

The United States raised $33.1 billion in tariff revenue in 2017, but $14 billion of that came from tariffs on apparel and footwear alone. These items account for 4.6 percent of the value of U.S. imports, but 42 percent of duties paid. That means while the average effective tariff rate for U.S. imports overall is just over 1.4 percent, rates for apparel and footwear are 13.7 percent and 11.3 percent, respectively.[i]

My colleague Daniel Ikenson has previously examined the evolution of clothing and textile protectionism. He concludes that such high tariffs do not protect domestic apparel manufacturing. Data from the U.S. Trade Representative shows that 91 percent of manufactured apparel goods and 96.5 percent of footwear are imported.

Why then are such highly regressive tariffs imposed? The answer appears to be the lobbying efforts of the capital-intensive U.S. textile industry. Textiles are the major input for labor-intensive apparel production, which largely occurs overseas. To quote Ikenson directly:

The U.S. textile industry insists on preserving those tariffs as leverage to compel foreign apparel producers to purchase their inputs. Preferential access [to U.S. markets] is conditioned on use of U.S. textiles. The high rates of duty apply, generally, to all “normal trade relations” partners. But those duties are much lower or excused entirely for trade agreement partners, provided that the finished garment comprises of textiles made in countries that are signatories to the agreement.

U.S. consumers pay the price of this protectionism, and poorer consumers especially. In 2016, the average household in the bottom income quintile spent $860 on apparel and footwear, or 3.4 percent of overall spending—the highest proportion of any income quintile. The average single-parent household put 4.5 percent of total expenditure toward these goods. The poor spend a disproportionate amount on clothing and footwear, and family structures most likely to be recipients of means-tested welfare programs (single-parent households) spend most of all.

But this protectionism is not just regressive because of relative spending patterns. Edward Gresser’s work has shown how, often, luxury clothes and shoes face lower tariff rates than inexpensive products.

Consider Table 3 from my report below (an updated version of Gresser’s work.) Where duties are applicable, a pure cashmere sweater import incurs a 4 percent tariff, a wool sweater a 16 percent tariff, and an acrylic sweater a whopping 32 percent. Men’s silk shirts see a 0.9 percent tariff, cotton shirts a 19.7 percent tariff, and cheaper polyester shirts a 32 percent tariff. Leather dress shoes have an 8.5 percent tariff, whereas cheap sneakers would see a 43 percent tariff. Windbreakers, leggings, tank tops, and other clothes made cheaply from synthetic fabrics face a 32 percent tariff if sourced from countries that the United States does not have a free-trade agreement with. Assuming poorer households tend to buy cheaper products, these differential tariffs have perniciously regressive effects.

The true overall cost of all this to poorer families is difficult to calculate. To get an accurate estimate would require detailed information on the effect on domestic substitute goods’ prices, knowledge of products bought by poor families and their propensity to import in the absence of protectionism.

Nevertheless, we can develop cautious lower-bound estimates. The average household in the poorest income quintile spends $655 on apparel and $206 on footwear per year. Assuming the import propensities for the population as a whole apply to poorer people implies $595 of apparel spending and $199 of footwear spending is on imported goods. Taking average effective tariff rates for apparel and footwear for this spending (13.7 and 11.3 percent) implies a combined direct tariff cost of $92 per year for the average household in the poorest income quintile, or $204 per year for the average single-parent household.

These figures likely underestimate the true burden, because they only represent the direct cost from current spending on imported goods. They assume tariffs do not raise domestically produced goods prices, though in reality the anti-competitive effect of the tariffs would be expected to raise prices here too. It also assumes the same effective tariff rates for apparel and footwear apply for the poorest households as for the whole population, but we have seen that products that the poor are more likely to buy tend to face higher tariff rates. Consumer welfare losses from tariffs, of course, are higher than the implied costs here, since tariffs make consumers less willing to buy imported products that they would otherwise prefer.

In short, next time the President asks where tariffs are applied, someone shout “apparel and footwear.” They are both large and regressive.

[i] U.S. International Trade Commission, “Interactive Tariff and Trade DataWeb,” at http://dataweb.usitc.gov. Data for imports for consumption, and effective rates calculated using “customs value” and “calculated duties” for 2017.

President Trump has made no secret about his intentions to deport illegal immigrants. His statements as well as administrative actions to remove certain guidelines that focused enforcement efforts on criminals has understandably caused a lot of concern among illegal immigrants, their American families, and those concerned with their plight. They should take comfort that the Trump administration’s efforts to boost arrests, the necessary precursor to a deportation, are stymied by limited local and state law enforcement cooperation with the federal government when it comes to identifying illegal immigrants.

Recently released data on the number of arrests by Immigration and Customs Enforcement (ICE) shows that they are arresting many fewer illegal immigrants under Trump’s administration than under President Obama’s, at least through June of 2018.  During the first full 17 months of the Obama administration, from February 2009 through June 2010, ICE arrested 437,671 illegal immigrants.  For the same first full 17 months of the Trump administration, ICE arrested 226,138 illegal immigrants, about half the number arrested during the same period in Obama’s administration.

Relative to the last full month of the previous administrations, the number of ICE arrests under Trump is up by a whopping 37 percent (Figure 1).  Over the same time, President Obama’s ICE was arresting 25 percent more people than under the last full month of the Bush administration, quite a significant increase on its own.  The increase under Trump is larger as a percentage because it started from a low base, but the increase in the number of arrests under Obama was larger.  For instance, the number of arrests under Obama was 5,803 greater in June 2010 than in December of 2008.  At the same point in the Trump administration in June of 2018, the number of arrests was up 8,965 over December 2016.

Figure 1: ICE Arrests by President

There are two broad categories of arrests by the ICE.  The first is called custodial arrests, which is when ICE picks up an illegal immigrant arrested by another law enforcement agency such as state or local police departments.  The second is called ICE arrests, which is when ICE itself arrests illegal immigrants on the streets.  Figure 2 shows that the number of custodial arrests have fallen dramatically since October 2008 while the number of ICE arrests has stayed relatively constant.  This means that local and state non-cooperation with ICE works to reduce the number of ICE arrests as between 70 percent and 90 percent of those arrests are custodial over the entire time.

Figure 2: ICE Arrests by Type of Arrest

Some states, like Texas, are fully cooperating with ICE when it comes to immigration enforcement while others like California are resisting mightily.  In Texas, there were 3,963 ICE arrests in May 2018 compared to 2,584 in December 2016, a 53 percent increase.  In California, there were 1,587 ICE arrests in May 2018 compared to 1,356 in December 2016, a 17 percent increase.  ICE is more active everywhere in the country, in sanctuary states and non-sanctuary states, but the difference is stark across such jurisdictions. 

The federal government under Presidents Bush and Obama convinced virtually every locality in the United States to sign up for the Secure Communities program that essentially turned over the vast majority of the arrested illegal immigrants to ICE for deportation.  Since President Obama was a Democrat, there was little initial political opposition to the massive increase in states and localities cooperating with the feds via Secure Communities – especially in Democratically controlled states with large numbers of illegal immigrants.  However, political reluctance to cooperate via Secure Communities built rapidly.  In 2011 Massachusetts, Illinois and New York requested to opt out of the program.  States like California then limited statewide cooperation with ICE and then President Obama replaced Secure Communities with a less punitive version called the Priority Enforcement Program that targeted criminals, which was in effect from 2015 to 2017.  Today, most states and localities with large numbers of illegal immigrants are not cooperating with President Trump’s ICE nearly as much as they cooperated with President Obama’s ICE – which is preventing Trump from arresting and, eventually, deporting large numbers of illegal immigrants.

There are other, lesser reasons why the Trump administration is unlikely to reach President Obama’s deportation record.  One is bureaucratic incompetence in the Department of Homeland Security, the Department of Justice, and other executive branch chaos that has so far prevented an orderly and organized deployment of law enforcement resources.  As a partial result of those administrative problems, they are incapable of convincing states and localities to enforce federal immigration laws.  Another reason is that illegal immigrants in 2018 are savvier than they were in the past, are better able to avoid law enforcement, and the few who were criminals were deported over the years, fewer new illegal immigrants have taken their place, and those remaining are less likely to come into contact with law enforcement. 

State and local government reluctance to enforce federal immigration laws and cooperate with the Trump administration has limited its ability to arrest and, eventually, deport large numbers of illegal immigrants.  At the current rate, ICE under the Trump administration will be able to arrest about half a million fewer illegal immigrants relative to the Obama administration even if President Trump serves two full terms.  Those who are dispirited by the Trump administration’s efforts to deport large numbers of otherwise law-abiding illegal immigrants should take some solace that their efforts to block full local and state cooperation with ICE is bearing fruit.

President Trump recently said that he would deploy troops to the Mexican border in response to the 3,000-4,000 Central American migrants and asylum seekers who are walking to the U.S. border.  This follows President Trump’s earlier deployment of about 4,000 National Guardsmen (2,100 troops remain) to the border to respond to another caravan earlier this year.  American Presidents have ordered troops to the border to assist in immigration enforcement several times when the flow of illegal immigrants was significantly greater than it is today.  Deploying additional troops to deal the approaching migrant caravan is unjustified and unnecessary. 

Previous U.S. presidents have deployed troops to the U.S. border to assist in immigration enforcement and drug interdiction.  The first such request after World War II was in 1954 when the old Immigration and Naturalization Service (INS) launched Operation Wetback (yes, that is what the government called it).  Then-Attorney General Herbert Brownell asked the U.S. Army to help round up and remove illegal immigrants.  According to Matt Matthews in his “The US Army on the Mexican Border: A Historical Perspective,” the Army refused to deploy troops for that purpose because it would disrupt training, cost too much money at a time of budget cuts, and it would have required at least a division of troops to secure the border.  Then-head of the INS General Swing remarked in 1954 that deploying U.S. Army troops on the border was a “perfectly horrible” idea that would “destroy relations with Mexico.”  It was also unnecessary. 

In 1954, the 1,079 Border Patrol agents made 1,028,246 illegal immigrant apprehensions or 953 apprehensions per agent that year along all U.S. borders.  For the entire border, Border Patrol agents collectively made 2,817 apprehensions per day in 1954 with a force that was 94 percent smaller than today’s Border Patrol.  In other words, the average Border Patrol agent apprehended 2.6 illegal immigrants per day in 1954.  Neither President Eisenhower nor the Army considered that inflow of illegal immigrants to be large enough to warrant the deployment of troops along the border despite Brownell’s request.   

Earlier in 2018, President Trump ordered about 4,000 troops to help the 16,605 Border Patrol agents on the southwest border apprehend the roughly 1,000 Central American migrants from an earlier caravan.  About 2,100 of those troops remain.  At that time, there were about 16.6 Border Patrol agents for each Central American migrant.  As for the current caravan approaching, assuming the number does not decrease any further, there are 4 to 6 Border Patrol agents for each person traveling from Central America in this caravan.  It’s likely that troops deployed on the border will outnumber the most recent caravan when (if) it arrives.   

In fiscal year 2018, Border Patrol apprehended about 396,579 illegal immigrants or about 24 per Border Patrol agent over the entire year on the southwest border, which works out to one apprehension per Border Patrol agents every 15 days.  By that measure, Border Patrol agents in 1954 individually apprehended an average of 40 times as many illegal immigrants as Border Patrol agents did in 2018.  If the current caravan makes it to the United States border, it would add about one and a half days worth of apprehensions at the 1954 level.  Border Patrol should be able to handle this comparatively small number of asylum seekers and migrants without military aid as they have done so before many times with a much smaller force.

Other Border Deployments

Since 1982, most U.S. military deployments and operations along the Mexican border were intended to counter the import of illegal drugs.  Joint Task Force 6 was deployed to the border in 1989 to aid in drug interdiction.  The regular deployment of troops for that purpose ended in 1997 after a U.S. Marine shot and killed American citizen Esequiel Hernandez Jr.  By July of that year, Secretary of Defense William Cohen suspended the use of armed soldiers on the border for anti-drug missions. 

On May 15, 2006, President Bush ordered 6,000 National Guard troops to the border as part of Operation Jump Start to provide a surge of border enforcement while the government was hiring more Border Patrol agents.  In 2006, there were about 59 apprehensions per Border Patrol agent or one per agent every four days.  Operation Jump Start ended on July 15, 2008.  In that year, there were an average of 41 apprehensions per agent or one apprehension every nine days per agent during the entire year.  President Obama also deployed 1,200 troops to the border in 2010 to assist Border Patrol, but they left in 2012.  In that year, Border Patrol agents on the southwest border individually apprehended an average of one illegal immigrant every 19 days. 

The two recent deployments to assist in enforcing immigration law along the border occurred when there were fewer apprehensions, represented by more days between each apprehension for each agent (Figure 1).  The higher the number for the blue line in Figure 1, the fewer people Border Patrol agents individually apprehend.  From about 1975 through 2006, the Border Patrol faced an annual inflow of illegal immigrants far larger than anything seen in recent years. 

Figure 1

The Average Number of Days Between Each Border Patrol Apprehension on the Southwest Border, 1975-2018

Figure 1: Average Number of Days Between Each Border Patrol Apprehension on the Southwest Border

In years and decades past, the average amount of time between Border Patrol apprehensions of illegal immigrants could be measured in hours while now it is measured in weeks.  The proposed deployment of American troops to the border at a time of low and falling illegal immigrant entries is an unnecessary waste of time and resources.  

Welcome to the Defense Download! This new round-up is intended to highlight what we at the Cato Institute are keeping tabs on in the world of defense politics every week. The three-to-five trending stories will vary depending on the news cycle, what policymakers are talking about, and will pull from all sides of the political spectrum. If you would like to recieve more frequent updates on what I’m reading, writing, and listening to—you can follow me on Twitter via @CDDorminey

  1. This week has been all Intermediate-Range Nuclear Forces Treaty (INF), all the time. If you’re wondering about the potential upsides, check out “Trump Is Right to Leave The INF Nuclear Treaty” by Kori Shake. If you’re wondering about the potential downsides, I suggest this overview by the New York Times’ editorial board, “‘Getting Tough’ Over a Missile Pact Could Weaken America.” If you have no idea where to start on this issue, stay tuned for tomorrow’s Cato Daily Podcast featuring Eric Gomez and yours truly. (Or you could always start at Wikipedia.) 
  2. Funding for Overseas Contingency Operations and Its Impact on Defense Spending,” Congressional Budget Office (CBO). Since 2001, a significant portion of the annual defense budget has been hived off to pay for wartime operations. But the CBO found that since 2006, at least $50 billion  of annual wartime funds (70 percent of the total OCO account) actually went to enduring activities (i.e. what it takes to run a military this size during peacetime). That’s a substantial misuse or misallocation of funds. 
  3. What Can 24 Satellites Do for U.S. Missile Defense?,” Thomas Roberts. This is pretty in the weeds, but if you follow missile defense or satellite aquisition then you’ll find this brief interesting. It offers a rebuttal to a 2011 report that claimed space-based missile systems could be incorporated in the existing force structure without incurring large program costs. 
  4. Here’s The Pentagon’s Initial Plan for Creating A Space Force,” Marcus Weisgerber. DefenseOne got ahold of an internal document on how the Pentagon is planning to organize the Space Force. Not many firm details are included—but coupled with Secretary Heather Wilson’s estimate of 13,000 people and $13 billion over the next five years, things seem to be in motion. 

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