AEI » Latest Content American Enterprise Institute: Freedom, Opportunity, Enterprise Mon, 26 Jan 2015 18:03:46 +0000 en-US hourly 1 Tech policy 2015: The year ahead Wed, 21 Jan 2015 17:14:27 +0000 If you have trouble registering for this event, please contact

Please join AEI’s Center for Internet, Communications, and Technology Policy for a look ahead at the top tech policy issues of 2015. Senator John Thune (R-SD) will present a keynote address, and panels of AEI scholars and outside experts will discuss issues including net neutrality, the Communications Act, and municipal broadband, cybersecurity, Internet governance, and incentive auctions.

As tech policy issues move to the fore in the national debate, this conference will offer unique insights into the year ahead.

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

]]> 0
The school choice journey: A conversation featuring US Senator Tim Scott Tue, 06 Jan 2015 22:15:02 +0000 If you have trouble registering, please contact

The impact of school choice in America is about more than improved student test scores. School choice has the potential to inspire political activism among low- and moderate-income parents and families. In their thought-provoking new book, “The School Choice Journey: School Vouchers and the Empowerment of Urban Families” (Palgrave Macmillan, 2014), researchers Thomas Stewart and Patrick Wolf track the experiences of families participating in the DC Opportunity Scholarship Program, the first federally funded school voucher program based in the District of Columbia. They find that parents look to several factors when choosing a school for their child, and the impacts of school choice on parents and families go far beyond anything that can be measured by a standardized test.

We welcome you to join us at AEI during School Choice Week as US Senator Tim Scott (R-SC), Stewart, and Wolf discuss “The School Choice Journey” and why promoting school choice is important to expanding the range of education opportunities for every student in the United States, regardless of zip code.

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

]]> 0
Yes, it’s constitutional for Congress to pass abortion laws Mon, 26 Jan 2015 18:03:46 +0000 A number of correspondents, and Jonathan Adler and Charles Cooke online, question the constitutional justification for federal abortion legislation, including a ban on most late-term abortions. (See NR’s editorial today, by the way, about how House Republicans have mishandled that issue in recent days.)

I believe such legislation complies with the Constitution, and indeed that more extensive legislation would comply with it. The case that such legislation is constitutionally authorized need not rely on a commerce-clause jurisprudence that most conservatives consider much too expansive in its view of the legitimate role of the federal government. Instead the case rests on the Fourteenth Amendment.

That amendment requires states to give “all persons” the equal protection of the law, and empowers Congress to “enforce” that guarantee. The protection against being deliberately killed is the most basic legal protection a person can have, and it is not being provided to all persons. If a state does not offer that protection to persons, Congress may intervene either by forcing states to perform this duty or by stepping in itself.

Nothing in the preceding paragraph is controversial when we are thinking about cases other than abortion. Nobody thinks that it would be constitutionally permissible for Alabama to announce that it will no longer enforce homicide laws to protect the odd Belgian tourist inside its borders, or the state’s adolescents, or that Congress would be exceeding its powers to intervene in these situations. (There might be arguments about how Congress should respond, but nobody would deny in principle that it has constitutional authority to intervene.)

Yet it is not just controversial to apply this same logic to legal protections for unborn children, it is a distinctly minority position. No justice of the Supreme Court has held that unborn children count as “persons” for the purposes of the Fourteenth Amendment. One of the few justices to consider the question — Antonin Scalia — has denied it emphatically: “I think when the Constitution says that persons are entitled to equal protection of the laws, I think it clearly means walking-around persons.”

Scalia is one of the best justices in American history, and I hesitate to disagree with him — not to mention with the late Robert Bork, who took the same view. Three considerations defeat that hesitation. First, none of the conservative justices has considered the precise question of whether Congress may legitimately act on the understanding that unborn children are persons within the meaning of the amendment; they have not even, so far as I know, considered it in speech. (Proponents of partial-birth abortion, for example, never really pressed the argument that a ban on it exceeded the commerce clause or Fourteenth Amendment authority of Congress.) Second, Bork, Scalia, and other conservative jurists have typically taken up the issue of personhood in the context of whether the federal courts should prevent states from allowing abortion or should somehow force them to forbid it. Third, the argument that these men have adduced against personhood for unborn children is weak.

That argument is one that Justice Harry Blackmun made in Roe v. Wade, where it makes its first appearance in constitutional law. It is that most references to persons in the Constitution have no possible prenatal application, and therefore when it refers to persons it cannot be including unborn children. Blackmun notes, for example, that the Constitution commands states to extradite any “Person charged in any [other] State with Treason, Felony, or other Crime, who shall flee from Justice.” That’s probably not going to be a fetus. Another constitutional provision Blackmun mentions: “No Person shall be a Representative who shall not have attained to the Age of twenty five Years . . . ”

That provision, though, also excludes 23-year-olds. Are they not “persons” within the meaning of the equal-protection clause? Newborns aren’t likely to flee from the criminal-justice system either. Are they not persons? (The problem with this argument attaches as well to Scalia’s offhand remark about “walking-around persons.” Surely he does not mean to exclude those in wheelchairs, or toddlers, from equal protection where an application would be appropriate.) There is no reason to assume that all references to “person” in the Constitution will apply to the same people.

The text of the amendment says “all persons,” does not define persons, and commits enforcement to Congress. If members of Congress have used their reason to determine that unborn children are, in truth, persons, the text seems to open the door for them to treat them as such for equal-protection purposes.

Of course this does not mean that the people who ratified the amendment had the specific intent of authorizing federal anti-abortion laws — or of producing other effects that the Fourteenth Amendment could correctly be read to require. But no sensible interpretive methodology insists on such specific intent. Occasionally you come across conservatives who believe that the equal-protection clause applies only to racial discrimination because that was the kind of discrimination that occasioned it. But that argument is rarely taken seriously because the decision was clearly made to frame and ratify the amendment at a higher level of generality than that. States can’t withdraw the protection of the homicide laws from gays, either, even though nobody in 1868 was thinking about them.

And as it happens, we do have evidence that lawmakers in that era considered unborn children to be persons who deserved legal protection, even if they were not thinking of that question specifically when debating the Fourteenth Amendment. The states were tightening anti-abortion laws in that period, laws that were plainly premised on a belief in the personhood of unborn children. (Blackmun attempts to rebut this point in Roe, but unsuccessfully.) Indeed, that is the chief way that law can recognize their personhood.

All of which suggests that constitutionally conscientious federal legislators can, and should, do what they can to provide legal protection to human fetuses past the age of 20 weeks, and for that matter before it.

]]> 0
How many families would be left out of Obama’s tax plan? Mon, 26 Jan 2015 16:58:03 +0000 ...]]]> President Obama took flack from me and others last week for floating a middle-class tax plan that left families with a stay-at-home parent out of the picture. His plan—which would offer dual-earner families with an income of less than $120,000 up to $3,000 per child in a childcare tax credit and a $500 credit for having a second earner—was designed to offset the costs associated with having a second worker in the labor force. But in targeting dual-earner couples, the president offered nothing to middle-class families with a stay-at-home parent. How many families are we talking about?

More than 6 million, according to current trends. Those are all the married families with a single earner, at least one child under 18, and an income of less than $120,000; they account for 36 percent of all middle-class married families. These 6 million families would be ineligible for one or both of Obama’s proposed benefits. A greater share of middle- and lower-income married families with children under five have a single earner and would therefore be ineligible for both of these tax benefits.

Source: American Community Survey. Notes: This data includes all married couples with at least one child under age 18 in the household using the ACS. (Married teen-parent subfamilies, of whom there were nine, were dropped from the sample.) Family income is the sum of wage/salary incomes of the household head and his or her spouse.

Source: American Community Survey. Notes: This data includes all married couples with at least one child under age 18 in the household using the ACS. (Married teen-parent subfamilies, of whom there were nine, were dropped from the sample.) Family income is the sum of wage/salary incomes of the household head and his or her spouse.

What gives here? Why did the president overlook or deliberately exclude families with stay-at-home parents—usually moms? The White House plan was designed both to make it easier for double-earner families to make ends meet and to draw more women into the labor force. The former concern is especially important, since a fair number of mothers would like to be in the labor force but cannot afford to work given the costs of quality childcare. This is particularly an issue for lower-income families who often would have to spend more on childcare, commuting costs, and other work-related expenses than a second earner would get in wages. So mom often stays home in these situations, as economists Melissa Kearney and Lesley Turner have noted. This is one reason why stay-at-home parents are much more common among lower-income married families (see figure below).

Source: American Community Survey. Notes: This data includes all married couples with at least one child under age 18 in the household using the ACS. (Married teen-parent subfamilies, of whom there were nine, were dropped from the sample.) Family income is the sum of wage/salary incomes of the household head and his or her spouse.

Source: American Community Survey. Notes: This data includes all married couples with at least one child under age 18 in the household using the ACS. (Married teen-parent subfamilies, of whom there were nine, were dropped from the sample.) Family income is the sum of wage/salary incomes of the household head and his or her spouse.

So, is the solution to just support families with two earners in the labor force, or those who would like to have both parents in the labor force but feel like they cannot afford to do so? No. The problem with Obama’s plan is that it overlooks not only families who currently have a stay-at-home parent and would like to keep it that way but also the substantial share of dual-earner families who would like to have a parent at home but feel they cannot afford to do so. In addition, it discounts the important caregiving, domestic work, and civic contributions that these stay-at-home parents make, benefitting the economy as well as the commonweal. The Obama plan would be particularly unfair to parents who are staying home to give children with physical or emotional problems the extra parental care they need.


Today, we live in a world where no one model of work and family captures the hearts and minds of married men and women trying to do right by their families. Some couples want dad at home, some want mom at home, and some want both parents in the labor force. The most popular work-family ideal for married mothers is somewhere between the extremes of working full-time and staying home: it is working work part-time, as a recent survey from the Pew Research Center indicates. (Working full-time and being at home full-time are the next most popular options for married mothers.)

If the president wishes to deliver tax relief that honors the ideals of all lower- and middle-income couples struggling to raise families today, there are some better policy options out there—from Senators Lee and Rubio’s tax reform plan to Robert VerBruggen’s proposal for a refundable child tax credit, which would “ease some of the financial hardships of parenthood without putting a thumb on the scale for parents facing hard choices about work and child care.” Let’s hope that President Obama and the Republican Congress can find common ground in 2015 to deliver middle-class tax relief that honors the work-and-family choices of all families.

W. Bradford Wilcox is a senior fellow at the Institute for Family Studies and a visiting scholar at the American Enterprise Institute.

]]> 0
New study: No, free-market capitalism doesn’t make nasty economic shocks more likely Mon, 26 Jan 2015 16:21:02 +0000 As you may have heard, many left-wing liberals blame the Financial Crisis and Great Recession on free-market economics. (Just like they blamed the Great Depression on too much economic freedom. As the Sacred Scrolls foretell: “All this has happened before, and all this will happen again.”) See what happens when there is too little government, too little regulation! Round up the usual blame-capitalism suspects: Paul Krugman, Joseph Stiglitz, Noam Chomnsky. the Democratic Party.

Of course, folks on the right counter by arguing that if you peel back the onion, the destructive hand of government eventually reveals itself. So who’s correct? Well, Milton Friedman would sure like the conclusion of the new paper “Economic Freedom and Economic Crisis” by Christian Bjørnskov of Sweden’s (!) Research Institute of Industrial Economics:

In this paper, I explore the politically contested association between the degree of capitalism, captured by measures of economic freedom, and the risk and characteristics of economic crisis. After offering some brief theoretical considerations, I estimate the effects of economic freedom on crisis risk in the post-Cold War period 1993-2010. I further estimate the effects on the duration, peak-to-trough GDP ratios and recovery times of 212 crises across 175 countries within this period. Estimates suggest that economic freedom is robustly associated with smaller peak-to-trough ratios and shorter recovery time. These effects are driven by regulatory components of the economic freedom index.

Bjørnskov measured economic freedom by using the Heritage Foundation’s Index of Economic Freedom. He then analyzed subsequent crisis risks as economic freedom changed, and the duration, depth and recovery time of crises when they occurred. He found that “increased economic freedom is only weakly associated with the probability of observing a crisis” and “not at all with the duration of economic crises.” Shocks also tend to be smaller, and the return to pre-crisis real GDP quicker.

So what exactly is the mechanism here? Why apparently are more economically free nations more resilient? Why do they seem to have — to use a Japanese word —  sokojikara,  or reserve strength? Bjørnskov says it is a story about how a more dynamic economy reallocate’s resources:

An interpretation that therefore offers itself is one of reallocation costs during crisis. As a crisis hits an economy, a substantial share of resources become unemployed, which creates profit opportunities for entrepreneurs to the extent that these resources become cheaper. Yet, whether or not this happens and at which speed existing firms and new entrants can reallocate resources depends on the regulatory framework. Licensing requirements and similar business regulations constitute entry barriers that prevent entrepreneurs from seizing legal opportunities and thereby limiting the economic and social losses during crises. Unstable monetary policies and inflationary interventions prevent the formation of precise price expectations, thereby increasing uncertainty, which would also hold back new investments (Friedman, 1962). Finally, labour market regulations can make it both more expensive and risky to hire new employees, providing a third channel through which deficient or inefficient regulations significantly increase the transaction costs of reallocation. Consistent with the evidence, this does not prevent a crisis from occurring, but limits its extent as more firms in a flexible economy can react faster and in a more economical way to the challenges and opportunities created by the crisis.

So some reasonable advice for policymakers, as I see it: First, do no harm. An economic crisis is probably not the best time to launch major new regulatory initiatives. In fact, it would be a good time to look at dismantling regulations that hinder startups (including new banks during a financial crisis.) As economist Michael Feroli has noted, ” … the decline in start-up activity has been a disconcerting feature of this expansion.” Oops.

Second, keep monetary policy stable, preferable through a steady, predictable rule like nominal NGDP targeting. Indeed, the Great Depression/Recession are both stories of monetary instability. And both also saw a big expansion of government’s regulatory power. As economist Scott Sumner explains about the 1930s, ” … a promising recovery in real GDP was aborted in late 1933 by the ill-advised National Industrial Recovery Act, which sharply raised wage rates.”

Third, help workers get back into the labor force or find better opportunities. So think about worker retraining, relocation vouchers, and the harmful effects of non-compete agreements. Distressed economies need more dynamism, not less.

]]> 0
Another SOTU 2015 post – not on what the president talked about, but what he didn’t Mon, 26 Jan 2015 16:17:11 +0000 Everyone has something to say about President Obama’s State of the Union address delivered last Tuesday night – the live-Tweeters, the political bloggers, the 31.7 million who actually watched it, everyone else who didn’t. From a foreign policy perspective, the president himself didn’t have that much to say, choosing to focus more on domestic issues and the recovering economy than the myriad of international crises erupting around the world today.

At a World Affairs Council panel Wednesday night, Kathleen Hicks of the Center for Strategic and International Studies pointed out that President Obama has a habit of declaring victory too early, citing Yemen and Russia as noticeable examples, not to speak of the president’s inaccurate account of rolling back ISIS advances in Syria.

Given in the shadow of a major shellacking in the November 2014 election, Obama’s tone was more divisive than not, touting perceived “victories” and glossing over major problems, particularly in the realm of international affairs. Failing to mention India less than a week before his trip to the country was noticeable, as was the lack of discussion regarding the defense budget or sequestration – which Hicks called “a glaring oversight.”

James Carafano of the Heritage Foundation noted that the president could have used the address as a means of highlighting positives, arguing that Obama could have given a shout out to “anchor” allies like the United Kingdom in Europe and Japan and Korea in Asia.

Focusing on promoting beneficial relationships would indeed be a better strategy in the long run than bragging about the administration’s supposed victories, international or domestic. That the “shadow of crisis has passed” is a highly debatable point, particularly in light of turmoil in Yemen and the fact that, as AEI’s Danielle Pletka put it, “the fight against ISIS is going really badly.” Hicks dubbed the president’s call to use military force against the jihadist group an important step. Unfortunately, there were few specifics and the president didn’t elaborate on what the use of force might actually look like.

Pletka emphasized the discrepancy between reality and the president’s rhetoric, noting that Putin has actually been in the driver’s seat when it comes to US-Russia relations.  On Iran, she added that President Obama “spoke from the heart” and that he genuinely believes that nuclear negotiations are going well. Perhaps, but the promise to veto any new sanctions bill that crosses his desk doesn’t exactly correspond to the president’s closing pledge to seek out the ideas of and work with Republicans in Congress.

Other omissions the panel highlighted: “China’s military growth is a real concern,” Hicks pointed out, adding that Gitmo also “got lost in the middle” of the Obama administration’s foreign policy. Andrew Weiss of the Carnegie Endowment for International Peace noted that the speech failed to address “just how much the US role around the world is changing.” The panelists all agreed: actual execution of policy is more than important than anything else when it comes to the next two years.  Indeed.

Follow AEIdeas on Twitter at @AEIdeas.

]]> 0
Are today’s millennials a new Victorian generation? Mon, 26 Jan 2015 15:28:37 +0000 Public policymakers and political pundits tend to focus on problems — understandably, because if things are going right they aren’t thought to need attention. Yet positive developments can teach us things as well, when, for reasons not necessarily clear, great masses of people start to behave more constructively.

One such trend is the better behavior of the young Americans of today compared to those 25 years ago. Almost no one anticipated it, the exception being William Strauss and Neil Howe in their 1991 book Generations, who named Americans born after 1981 the Millennial generation and predicted that “the tiny boys and girls now playing with Lego blocks” — and those then still unborn — would become “the nation’s next great Civic generation.”

The most obvious evidence of the Millennials’ virtuous behavior is the vast decline in violent crime in the last 25 years. The most crime-prone age and gender cohort — 15-to-25-year-old males — are committing far fewer crimes than that cohort did in 1990.

Statistics tell the dramatic story. In two decades the murder rate fell 49 percent, the forcible rape rate 33 percent, the robbery rate 48 percent, the aggravated assault rate 39 percent. Government agencies report that sexual assaults against 12-to-17-year-olds declined by more than half and violent victimization of teenagers at school declined 60 percent.

Binge-drinking by high school seniors is lower than at any time since 1976, sexual intercourse among ninth graders and the percentage of high school seniors with more than three partners has declined.

There has been much ado about rape on college campuses today, with President Obama among others stating that one in five women students will be raped or sexually assaulted. But that statistic is based on a bogus survey, covering just two colleges, with self-selected rather than randomly selected respondents and a laughably broad definition of “sexual assault.” A recent Justice Department report showed that the rate rape on campus was not 20 percent but 0.6 percent.

And today’s young are better behaved despite what blind statistical trends might seem to hint at. Compared to the young Americans of 1990, their ranks include a higher percentage of Hispanics and blacks, who statistically tend to have above-average crime rates. Today’s young are also more likely to come from single-parent households—another high-risk factor. Demographics suggested there would be more bad behavior. Instead, there is much less.

What accounts for this virtuous cycle? I am inclined to give some credit to better police tactics and welfare reform, the great positive conservative policy successes of the 1990s. Others might credit the Clinton administration’s increase in the Earned Income Tax Credit or bipartisan-supported education reforms. But partisan explanations, though plausible, seem inadequate.

I think what we are seeing is a mass changing of minds, something like the movement in Victorian England toward what historian Gertrude Himmelfarb described as “the morality that dignifies and civilizes human beings.”

My theory is that young people do what is expected of them, in two senses of the word “expected.” One is statistical expectation. Americans in 1990 expected young people, especially from disadvantaged backgrounds, to commit lots of crimes. They had been doing so, after all, for 25 years. But Rudy Giuliani and others adapting his methods reduced crime dramatically, and statistical expectations rapidly changed.

The other sense of the word “expected” is moral expectation. A parent tells a boy he is expected not to shoplift, bully, rob, rape or kill. She tells a girl she is expected not to sleep around or get pregnant. The parents of the last 25 years grew up in years of high crime, high divorce and high unmarried births. Evidently they wanted — expected — something better from their own children.

It’s true that unmarried parenthood has risen. But teen births, like violent crime, have been in sharp decline. Now the latest statistics tell us that birth rates are, unusually, up among married women and down among unmarried women.

There remain stark differences between the experiences and behavior of high-education and -income and low-education and -income Americans, as Charles Murray showed in his 2012 book Coming Apart. But perhaps they are starting to converge.

Liberals and conservatives often assume that moves away from traditional moral rules must inevitably continue. How can you keep them down on the farm once they’ve seen “Paree?”

But today’s America, like Victorian England, shows that virtuous cycles are possible as well. People can learn from experience, and those who have seen the downside of bad behavior may choose to behave better.

Michael Barone is a senior political columnist for the Washington Examiner. This column is reprinted with permission from

]]> 0
Does the Single Point of Entry strategy eliminate ‘too big to fail’? Mon, 26 Jan 2015 14:50:22 +0000

In December 2013, the Federal Deposit Insurance Corporation released a proposal on the so-called “Single Point of Entry” (SPOE) strategy as a means of resolving large failing banks without financial-market disruption. In a recent paper, AEI scholars Paul Kupiec and Peter Wallison raised questions about legal support for the SPOE strategy in Title II of the Dodd-Frank Act, whether the strategy can be used for resolving the largest failed banks, and the economic consequences of using the SPOE approach to attenuate the systemic risk of a large-bank failure. To facilitate a SPOE resolution, regulators recently proposed new requirements that large financial firms have enough long-term debt and equity — or total loss absorbing capacity — to cover potential losses and bank recapitalization. Mr. Kupiec and Mr. Wallison’s paper questions whether these measures will allow authorities to resolve large banks without a bailout or disorderly break-up.

Mr. Kupiec and Mr. Wallison will presented their paper and fielded audience questions during a live Teleforum conference call.

  • Paul H. Kupiec, Resident Scholar, American Enterprise Institute
  • Hon. Peter J. Wallison, Arthur F. Burns Fellow in Financial Policy Studies, American Enterprise Institute
]]> 0
Saudi Arabia trends hardline Mon, 26 Jan 2015 14:36:39 +0000 The late Saudi King Abdullah often sought to project a reformist image but, just as with Iran across the Persian Gulf, the rhetoric of reformism was for external consumption only. The reforms he once discussed—letting women drive, for example—never materialized. While many in the United States and Europe condemn the Bahraini government for its repression of its Shi‘ite population, the West remains largely silent on parallel Saudi action in the Eastern Province. The only difference between the two, of course, was that Bahraini forces use tear gas and rubber bullets, whereas their Saudi counterparts prefer live ammunition.

While Abdullah’s 79-year-old and ailing younger brother Salman became king upon his death, he will probably not hold that position long. Like many in the inbred royal family, he has congenital spinal problems, he has suffered at least one stroke, and some analysts suggest he suffers from dementia. Rumors always surround the Saudi royal family, and some of those amplifying them have never met the people whom they discuss, let alone stepped foot in Saudi Arabia. Still, given his age, Salman’s tenure will probably last months, or perhaps a year or two, but even the best medical treatment might not be able to keep him alive much longer.

His brother and Crown Prince, Muqrin bin Abdulaziz, is a relatively spry 69-years-old. He used to head the Saudi intelligence service and was the family disciplinarian. If he was willing to put princes behind bars, it is not hard to imagine his attitude toward dissidents, Sufis and Shi‘ites. Indeed, while some analysts suggest he is a relative liberal—and that term must be taken with a grain of salt within the context of the royal family—he was a strong proponent for an even stronger crackdown on the restive, oil-rich Eastern Province.

The real problem, however, lies with the appointment of Muhammad bin Nayef as deputy crown prince. Bin Nayef, now only 55, will represent a generational shift in the Saudi leadership which traditionally passes between brothers rather than from father to son. He is a hardliner and steeped in sectarian warfare. He has, for example, handled the Saudi aspect of operations in both Yemen and Syria. While Washington Post columnist David Ignatius has written that Bin Nayef’s role in Syria was a reflection of the Kingdom’s concern over the growing radicalization of the Syrian opposition, Saudis from the Eastern Province suggest that Bin Nayef has been the driving force for Saudi Arabia’s most hardline, repressive policies. And he also took a hardline against allowing Saudi women to drive, an issue which is not only a priority for feminists, but also is a matter of economic concern for the Saudi middle and lower class for whom driving wives and daughters either distracts from work or represents a large expense to hire a driver.

There is often hope in the West that autocratic regimes moderate with time. Alas, Bin Nayef’s record and appointment as second-in-line suggests the intention by the Saudi royal family to tack more conservative in coming years. It seems rather than blunt sectarianism and repression with reforms, the House of Saudi has just decided to double down on repression. That will neither bring economic stability and health to Saudi Arabia nor will it lend itself to moderation and stability throughout the region.

Follow AEIdeas on Twitter at @AEIdeas.

]]> 0
Does Erdoğan know why Europe rejects Turkey? Mon, 26 Jan 2015 14:27:03 +0000 On January 24, Turkish President Recep Tayyip Erdoğan gave a press conference in which he declared, “If you oppose Islamophobia, then you must admit Turkey into the EU.” Perhaps that would be the case if Europeans saw the world through the lens of religion as Erdoğan does, but fortunately, European standards have evolved over the last 500 years. But lest Mr. Erdoğan really believe that “Islamophobia” (or, as Erdoğan understands the term, the temerity to disagree with such a profound religious scholar as that which Mr. Erdoğan sees in the mirror each morning) is preventing Turkey’s membership in the European Union, here are a few other criteria he might want to consider before blaming Islamophobia:

  • If a leader single-handedly transformed his country into the world’s biggest prison for journalists, does his country belong in Europe?
  • If a leader embezzles billions of dollars and protects underlings from facing charges, does his country belong in Europe?
  • If a leader claims for himself the right to shut down without legal process any internet site that he dislikes, does such a country belong in Europe?
  • If the murder rate of women increases 1,400% during a leader’s tenure, does such a country belong in Europe?
  • If a leader of a country once respected on the world stage now becomes the butt of jokes for his paranoid rantings and conspiracy theories, does such a country belong in Europe?
  • If, while Europe recoils from the attack on Charlie Hebdo, a regime instead embraces Hezbollah sympathizers celebrating that attack, does that regime belong in Europe?
  • If a country’s officials and diplomats embrace antisemitism, does Europe really need that country?
  • If a leader claims that his country’s is an economic powerhouse, but personal debt has skyrocketed more than 3,000%, the government closes banks for political rather than financial reasons, and the currency has once again become unstable, does that country belong in Europe?
  • If rather than fight terrorism, a country encourages it, does that country belong in Europe?
  • If a country promises an ethnic minority rights and normalization, but then fails to deliver and continues to repress that ethnic minority, does that country belong in Europe?
  • If a country perpetrates the longest and only remaining military occupation of another country in Europe, does it belong in Europe?

If Mr. Erdoğan truly wants to know why Turkey’s European Union membership has gone nowhere, perhaps he might consider what everyone besides him realizes: Turkey is led by a man whom the world understands is corrupt, buffoonish, and a terror sponsor, a man who invites ridicule rather than respect, and a leader whose corruption has almost singlehandedly undercut the image of Islamic parties as less corrupt than their secular counterparts. Mr. Erdoğan, the problem is not in Europe. The problem is sitting in a new palace in Turkey surrounded by B-Movie extras.

Follow AEIdeas on Twitter at @AEIdeas.

]]> 0
Europe’s Greek miscalculation Mon, 26 Jan 2015 14:26:45 +0000 In September 2008, US policymakers were caught flatfooted by the Lehman bankruptcy as they grossly miscalculated the fallout from that event. Today, European policymakers would seem to be making a similar miscalculation in the context of the fast moving Greek developments. First, they seem to be excluding the possibility that Greece could be forced out of the Euro. Second, they seem to be minimizing the cost of a Greek exit to the rest of the European economy were that to occur.

Despite the almost certain prospect now of a Syriza government, European policymakers appear sanguine about the possibility of a Greek exit. They largely base their optimism on the view that a Syriza government would have no interest in having Greece forced out of the Euro for fear of the domestic economic dislocation such an exit would cause. They also take the view that European policymakers do not have an interest in having Greece leave the Euro for fear of taking the Eurozone into totally unchartered waters. Since neither Syriza nor European policymakers wish to see Greece leave the Euro, the optimists reason that a deal will soon be forged between Syriza and the troika.

Were it all so simple. Plausible as the optimists’ argument might sound, it overlooks the very real constraints on both a Syriza government and the troika. After an election campaign promising large social spending increases and a tough negotiating line with the troika, it would seem highly implausible to think that Syriza can quickly make a large policy U-turn to satisfy the troika’s demands. Since doing that would risk losing total credibility with its political base and splitting an already divided political party.

For its part, the troika’s room for maneuver is limited by the fear of setting precedents for the rest of the Eurozone. If Greece is accorded a break from budget austerity and granted official debt relief, how can the troika withhold similar concessions to countries like Ireland, Italy, and Portugal? In addition, such concessions might make it difficult for northern governments to get their parliament’s approval for future Eurozone bailouts, especially after the ECB’s recent move to full blooded quantitative easing.

These all too real constraints highly reduce the prospect that a quick deal can be reached. At a minimum, a new Syriza government will have to go through the time consuming motions of being tough in negotiation. For its part, the troika would need to have real reasons for making concessions that they were not prepared to make to the previous government.

The trouble with protracted troika negotiations is that Greece’s economy is in no position to withstand another few months of political uncertainty. There are already signs that Greece’s fragile economic recovery is being adversely impacted by uncertainty while its tax collections are plummeting. More troubling yet, there are clear indications that Greece’s bank depositors are already starting to draw down deposits.

Even more surprising than minimizing the chances of a Greek exit is the European policymakers’ downplaying of the fallout from such an event. For these policymakers seemed to have convinced themselves that the European economy now is in a better position to weather such an event than it was in 2012 and that it now has in place the financial safety nets to handle such an occurrence.

Among the most important of the risks being overlooked is that a Greek exit would send the clearest of messages to the Eurozone public that Euro membership was no longer irrevocable. More importantly, it would send the message to Eurozone bank depositors that they could no longer count on the ECB to always be there to act as a lender of last resort. That realization could provoke a run on the banks in countries like Italy, Portugal, and Ireland where public and private debt levels are now at very much higher levels than they were in 2012 and where these countries now find themselves caught in deflationary traps.

Another miscalculation that European policymakers might be making relates to the strength of the financial safety nets that they have put in place. To be sure, the Eurozone now does have a well-funded European Stability Mechanism and an ECB that is committed to buying as many of a member country’s bonds as might be needed. However, these mechanisms can only be activated should the countries being supported commit themselves to IMF-style economic adjustment programs. Considering the anti-austerity political backlash now characterizing these countries, it is far from clear that they would agree to submit themselves to the IMF’s tender mercies.

In light of the global economy’s unfortunate experience with the Lehman bankruptcy, one has to hope that European policymakers are only posturing with their threats to Greece ahead of its elections. Since if they are not, both the European and the global economies could be severely tested should Greece indeed be forced out of the Euro following those elections.

]]> 0
Japan should not turn inward after ISIS beheading Mon, 26 Jan 2015 14:11:16 +0000 With the reported beheading of hostage Haruna Yukawa, Japan has joined the list of countries scarred by the brutality of ISIS. The country now waits to learn the fate of second hostage Kenji Goto, as Japanese Prime Minister Shinzo Abe has publicly announced that he will not pay the demanded $200 million ransom, the same amount Abe pledged in humanitarian aid to countries combatting ISIS. What is clear is that ISIS will target the citizens even of nations that provide non-lethal aid to those fighting its virulent Islamic ideology.

There are stories that the Japanese public is divided on its views of Yukawa and Goto, with some blaming the men for putting themselves unnecessarily into danger. The plight of Goto, a freelance journalist, apparently garners more sympathy than that of Yukawa, a self-described military consultant and soldier of fortune. Some go so far as to say that the fate of Yukawa and Goto prove that Japan should not get more involved in the world, and that Prime Minister Abe’s plans for a greater Japanese role abroad will only lead to more tragedy and crisis.

This is exactly the wrong lesson to take from the brutal murder of Yukawa. Yes, he may have put himself in harm’s way, but pulling back from the world will not make it, or the Japanese people, any safer. An island nation mentality cannot work in the 21st century, just as it could not work at any time after 1868. Japan has vaulted to being Asia’s most modern and wealthy nation precisely because of its post-World War II global role. Isolation is an impossibility in a globalized world, and calls for it to turn inward will only lead to a marginalized Japan. Japanese should not be expected to flood war zones for whatever reason; but to apply a mistaken notion about how to avoid risk in a world that is not self-correcting can only harm Japan’s interests. Once the decision is made to avoid risk, then it will become increasingly easy to justify further pullback, maybe by giving up Tokyo’s budding cooperation with Southeast Asian nations, or possibly even by giving up its territorial control of islands in the East China Sea that are disputed by China.

The lesson of Yukawa’s death, rather, should be that liberal nations face a choice: whether to do what they can to battle growing disorder in the world, or to try and hide. The Japanese public should think about what kind of global role will best serve their interests in the Middle East, as well as in Asia.

Follow AEIdeas on Twitter at @AEIdeas.

]]> 0