Another Compelling Reason to End the Federal Reserve

In recent weeks, Donald Trump has been making the case that the Federal Reserve’s decisions are motivated by politics. There are good reasons for believing this is the case, as we’ve argued previously. (See “The Myth of an Independent Federal Reserve”)

What often gets overlooked in this debate, however, is the alternative.

If the Fed is not political, then the actual explanation for their behavior may be even worse: They are completely incompetent.

Strong words require strong evidence. So we submit this delightful chart, as cited by Zero Hedge.

In the chart above, the FOMC stands for the Federal Open Market Committee, which is simply the part of the Federal Reserve that sets interest rates and monetary policy. In most contexts, the FOMC and the Fed can be used interchangeably.

Meanwhile, the Federal Funds rate is the interest rate that the Fed changes in order to influence economic activity. When the economy is strong, the Fed will consider raising the Federal Funds rate. When the economy is weak, the Fed will typically reduce the rate in an effort to stimulate the economy. Critically, the Fed has exclusive discretion over setting the Federal Funds rate.

Thus, in the chart above, the colored lines represent the Fed’s own projection of the Federal Funds rate in the future, as expressed at the FOMC meetings. They are literally forecasting their own future decisions.

The dotted black line is what actually happened. And there’s the rub.

As you can see, reality bears no resemblance to the forecasts of the Fed. The Fed has been dramatically and consistently wrong, overestimating the future rate path in each case.

This is remarkable because, again, they are forecasting their own decisions. And they still can’t get it right.

At each press conference and interview, Fed officials tell the public that the economy is very healthy and should be able to absorb a rise in interest rates. But when it comes time to actually raise rates, they don’t follow through.

This behavior makes sense if they’re being political–constantly overstating the health of the US economy makes the party in the White House look better. It also makes sense if they’re clueless–they genuinely believe their own narrative that economic growth is always about to accelerate, and they are just constantly wrong.

No other explanation works.

For instance, it may be tempting to imagine a more sophisticated motive for the Fed’s behavior. Perhaps the Fed is deliberately misleading the market about the health of the economy to keep investors confident? Maybe, but this would be a very dangerous approach. After all, investors use expectations of future interest rates in order to make long-term planning decisions. If investors make these decisions using flawed information, they will make bad decisions–which would have severe negative consequences for the economy. Thus, we should not assume the Fed is reckless enough to use deception as a deliberate policy tool.

So we’re left with politics or incompetence to make sense of the Fed’s behavior. Unfortunately, the economy suffers either way.

Because if the Fed can’t even make reasonable forecasts, it can’t possibly be trusted to determine the “correct” level of interest rates for the world’s largest economy.

Sept 11 Victims Will Get a Chance for Justice

For once, a bipartisan agreement in Congress actually produced a good outcome. President Obama’s veto gets destroyed, and the 9/11 victims will be allowed to pursue justice in the courts against Saudi Arabia.

Last week, President Obama vetoed the Justice Against Sponsors of Terrorism Act (JASTA), which would allow the 9/11 victims to sue the Saudi government for its apparent involvement. Many leaders in Congress claimed they had the votes needed to overcome the veto (2/3 in both houses), but it almost seemed too good to be true.

On Wednesday, the votes finally occurred and it wasn’t even a contest. The Senate overrode Obama’s veto 97-1, and the House overrode the veto at 348-77. JASTA will become law, and the principle of sovereign immunity now has an exception for terrorism. Congress doesn’t deserve praise often, but this is one of those days.

JASTA is likely to have several important effects. Here’s a brief rundown:

A Chance for Justice

As a simple matter of justice, JASTA is a very positive development. Until now, there’s been a lot of violent retribution in response to the 9/11 attacks, but the vast majority of it was directed at unsavory people and governments that had little or no connection to the attacks themselves. Thus, real justice has remained elusive.

In the name of 9/11, the US first invaded Afghanistan to overthrow the Taliban government. This occurred in spite of the fact that the Taliban is not the same thing as Al Qaeda and actually offered to extradite Osama bin Laden for prosecution, under fairly reasonable conditions. The US opted not to pursue diplomacy, however, and threw the country of Afghanistan into chaos that still persists to this day. The Iraq invasion was also partly justified on Iraq’s alleged involvement in 9/11–even though Saddam Hussein’s government was actually a bitter enemy of Al Qaeda and like-minded groups. This too created a situation of unimaginable suffering for the Iraqi people that also persists to the present.

Thus, it’s been darkly ironic that Saudi Arabia, the country that appears to have the most substantial links to the 9/11 attacks, suffered no consequences whatsoever in the aftermath of 9/11. Their alliance with America was preserved intact as America threatened or bombed many of its neighbors. The US government eventually got around to finding and executing Osama bin Laden in 2011–nine years after he might have been captured if the US had accepted the Taliban’s offer. Given this history, it’s fair to say justice hasn’t been fully served in the case of 9/11, and Congress’s action this week will do something to rectify this situation.

New Evidence Could Jeopardize the Saudi Alliance

The discovery procedure involved in the 9/11 lawsuits may reveal new information that has previously been withheld. If this information further confirms suspicions of Saudi complicity in the attacks, it may have negative implications for the US-Saudi alliance. And given that the Saudi government is currently engaged in an aggressive war against neighboring Yemen, with US support, an end to the alliance would be a positive development for peace.

Economic Uncertainty for US and Saudi

Naturally, the Saudi government has opposed any measures that aim to shine a brighter light on Saudi involvement in the 9/11 attacks. One tactic used by the Saudis was a threat to sell off billions in US government debt.

It’s not clear exactly how much US government debt the Saudi government and its officials actually own. It’s also unclear whether the Saudi government will follow through on this threat now that their nightmare has become a reality. But it is a real risk nevertheless.

Assuming they do decide to sell all of their portfolio, the repercussions in the US economy could be considerable. A large sell-off of US debt would put upward pressure on interest rates that are currently near all-time lows. If the shock is significant enough, it could spark a larger panic in the financial markets.

Unfortunately for Saudi Arabia, liquidating their US assets is a double-edged sword. For their threat to be meaningful, they’d have to be willing to try to cause an outright recession. But if such a recession really did occur, the Saudis would suffer as well, because oil prices would likely fall further in the event of a recession.

It remains to be seen what the Saudis will ultimately decide. In the meantime, JASTA just gave the global economy, one more source of uncertainty.

Accountability for US Crimes?

One of the most popular arguments against passing JASTA was that it would subject US personnel to lawsuits as well. However, this argument conveniently omits the fact that the bill only lifts sovereign immunity in the case of terrorism. Should US personnel and the US government really be immune to any legal sanctions if they are committing acts of terrorism? What reasonable person could possibly justify this?

Of course, it seems virtually certain that some parts of the US government have participated in activities consistent with terrorism. This explains the opposition to the law.

Having said that, the official concern that US personnel would be subject to the rulings of foreign courts should be treated with skepticism. The US violates international law and other countries’ wishes on a regular basis, without consequences. The US government has also proved eager to apply double standards internationally whenever it proves convenient. It’s difficult to imagine any of these trends would change just because Congress passed a law.

In fact, the day after the veto was defeated, many lawmakers were already talking up the possibility that the legislation could be modified to further protect US personnel from any legal ramifications. If such a modification is passed, it should be viewed as a formality. The probability that the US government would honor the rulings of a foreign court was basically zero. The most likely modification of JASTA will amount to a novel legal rationale to justify the double standard.  But the double standard will exist either way.

Summary

The passage of JASTA over President Obama’s veto may be the most promising foreign policy development this year. It marks the continuing deterioration of the US-Saudi alliance and the decline of Saudi power in the region. For supporters of peace and nonintervention, this is all to the good.

*This article was updated to reflect the fact that some lawmakers are discussing a modification to JASTA to protect US personnel from legal consequences.

How Libertarian Principles Would Protect the Environment

It may sound strange at first. But in fact, libertarians are likely to do a better job of protecting the environment than the environmental regulations they want to abolish.

The Story

A new article by Ryan McMaken at the Mises Institute offers an excellent summary of the libertarian* position on environmental regulation and pollution. If you’re not a libertarian, the conclusion might surprise you.

McMaken shows how a strict application of property rights could disincentivize pollution more than environmental regulations passed by the government. In the process, the article also explains why major polluters (and many free market economists) actually prefer government regulation to the property rights solution. To polluting businesses and some economists, environmental regulation offers the opportunity for greater profits and economic efficiency, respectively.

But to libertarians like McMaken, environmental regulation often gives polluters a free pass to violate other people’s rights.

The article discusses some economic jargon at times that may not be immediately familiar. However, the underlying points are still accessible without much prior knowledge. It’s another delightful issue where libertarian theory is surprisingly compatible with priorities typically found on the far left. Here’s the link:

Are Libertarians Too Anti-Pollution?

Why It Matters

The two-party system in the US often causes us to think of political issues along a single axis, with Democrats / progressives and Republicans / conservatives occupying different parts. This leads us to believe there are really just two positions on a subject. On some issues, this works well enough. There isn’t a lot of room for nuance in the torture debate for instance; for and against pretty much covers it.

But on environmental regulation,** this way of thinking fails quite miserably. Here, the standard idea is that if you care about the environment, you need to have the government protect it with regulation (Democrats / progressives). If you don’t care about the environment or you really care about jobs / business, then you want the government to regulate it less–and basically give businesses free reign to do whatever they want (Republicans / conservatives). In this binary game, libertarians usually get lumped in with conservatives because they support reducing regulation.

In reality, libertarians represent a third way on this issue. They don’t want to give businesses more power; rather they want to restore and protect property rights of all individuals. And in practice, this would tend to give businesses far less power. It also simplifies a great many political problems in the process.

Let’s take the Keystone XL Pipeline as an example of how these competing theories might work. Under the regulatory approach, the government prepares an environmental impact statement (among other things) to determine whether a project can proceed. If the government decided the impact was sufficiently small or acceptable, and it passed other standards, the project could proceed–even if the farmers and property owners in its path objected. An environmental impact statement could be costly, but convincing the EPA to approve a project is much easier than convincing every individual landowner in the vicinity the project is a good idea. In effect, the regulatory approach concentrates the decision-making power. This helps businesses get what they want because it is feasible to lobby / corrupt a centralized authority.

By contrast, in the libertarian framework, each individual property owner would have a de facto veto on the matter. The key question would no longer be whether or not the Keystone XL Pipeline would do irreparable harm to the endangered sage grouse. Rather, the fundamental question would be whether each property owner in the pipeline’s path voluntarily consented to the plan, either by selling their property outright or else granting access for a fee. And if anyone objected, the pipeline would have to either go around them, or be scrapped entirely.

The same logic would apply to a new coal power plant. Individual property owners in the vicinity would be subjected to reduced air quality as a result of the plant. If the reduction was noticeable, the power company would be committing harm against the local residents. To make them whole, the company would have to compensate them directly or else attempt to buy them out. If the company and the property owners could not come to an agreement, the company would have to shut down or face costly tort lawsuits. Again, the business has a lower probability of prevailing compared to the status quo where they simply have to convince politicians or regulators to approve a project that will create jobs and tax revenue.

Strictly speaking, libertarian theory does not take a position on environmental protection one way or the other. The focus is on ensuring that property rights and the nonaggression principle prevail. Environmental protection just happens to be a by-product. But ironically, the degree of protection created is likely to be much stronger than the regulatory protection deliberately crafted by the government.

*Libertarians don’t agree on everything, and there are several different kinds–not all of which sign on to the property rights solution to environmental regulation / protection. For instance, presidential candidate Gary Johnson has said that he believes the EPA is necessary. For the purposes of this article, the type of libertarian we’re referring to is the one that hails vaguely from the Rothbard-Ron Paul camp, which tends to emphasize natural rights theory.

**We’re primarily thinking about point-source pollution when we discuss environmental regulation in this piece. We’re not making a case for abolishing all environmental regulations. In our view, a reasonable case can be made for environmental regulations at a higher level when dealing with more distributed sources of pollution (like automobiles).

Presidential Race to the Bottom Takes Center Stage

Donald Trump achieved the unthinkable at the first presidential debate. He was boring.

The debate was highly anticipated given the nearly two-month lag since the national conventions. And the polls had basically come to a draw, with Donald Trump gaining significant ground in recent weeks as Hillary’s 9/11 “overheating” episode took its effect. While no one really has a meaningful lead, Trump had the momentum going into the night.

The ultimate structure of the debate itself also seemed to favor Trump. The moderator, Lester Holt, largely asked both candidates to weigh in on the same questions, limiting the amount of perceived or actual bias. And more often than not, Holt allowed them to just respond to each other at length with limited intervention. Trump’s campaign rose significantly on his extemporaneous insults and attacks on moderators and fellow primary contenders, while Clinton is known for being a polished, but highly scripted politician. Given this, Trump seems to have been perfectly suited for the contest.

And yet, the whole affair proved to be a tremendous disappointment.

The problem is that the debate focused significantly on policy. Because both candidates have pretty awful positions on most things, this was bound to be uninteresting. We could not realistically hope for many useful political ideas to be communicated last night, and indeed, few emerged.

Trump proved that he could move beyond the sound bite to give rambling two-minute responses that appear to be about policy without saying much of anything. But these were never inspired, frequently irrelevant to the question asked, and even more disjointed than normal. They bore distinct signs that Trump had been getting coached on typical Republican talking points, and this was a tragedy. Trump’s previous appeal to many, in addition to his embellishment, has been his willingness to say things a Republican strategist would never even think–like the idea George W. Bush knew that the pretense of the Iraq War was false. Last night, with few exceptions, Trump stuck with themes you could hear come of out of any other typical Republican. It may have made him more presidential I suppose, but it did so at the cost of making him boring.

Perhaps another tactic employed in the aim of seeming presidential was evident from Trump’s limited attacks. Clinton criticized Trump directly on many different issues, but Trump didn’t retaliate in the way we’ve grown accustomed to. He appeared to have a few planned attacks–on trade policy, Hillary’s “super-predator” remarks about black people back in the day, and the Clinton Campaign’s promotion of the foreign Obama angle back in 2008. But beyond this, Trump kept the extemporaneous attacks to a minimum.

Clinton, for her part, did not offer too many surprises. She was generally the more coherent of the two, even if she was coherently explaining deeply flawed policies. It’s difficult to imagine any of her prepared one-liners will gain much traction, like “trumped-up trickle-down economics”. She appeared, and almost certainly is, the more knowledgeable of the two on domestic policy and foreign policy alike. However, she also appeared very condescending in the process–openly laughing after Trump’s responses on multiple occasions.

The personal dynamic that seemed to emerge on stage was that between a rebellious student (Trump) and the belittling teacher that no one likes (Clinton). Trump filled this role by routinely interjecting in Clinton’s time with short bursts of indignation and dissent. Meanwhile, Clinton rarely managed to mask her open contempt. Some examples of the latter after Trump finished a response.

You know, just join the debate and say more crazy things.

Well, listen to what you just heard.

Whew, OK.

See what I mean? In some ways, the Hillary Clinton on the debate stage personified the judgmental tone that leading media outlets have applied to the Trump campaign throughout. People that are already in the Clinton camp, surely ate it up. It’s not clear how the average undecided voter will respond to it.

Finally, we’ll close by noting what may be the most depressing aspect of all. Nearly every time the candidates criticized their opponent for a bad position, it was followed up with a position that was as bad or worse. A non-exhaustive list follows:

• Trump criticizes Clinton’s hypocrisy on the Trans-Pacific Partnership, which she initially supported. Of course, Trump’s own position is that freer trade is generally bad, rather than saying just the TPP is bad.
• Clinton and the moderator push back on the Trump’s support for the unconstitutional policy of stop-and-frisk, which typically involves racial profiling, against African Americans. Shortly thereafter, Clinton supported banning gun sales to people on the no-fly list–which is almost certainly based on profiling Arabs and Muslims and involves no due process.
• Trump criticizes Clinton on foreign policy and blames her for ISIS’s existence. Good so far. But how’d she do it? Because she and Obama pulled the troops out of Iraq too soon, which Clinton correctly noted was actually negotiated under Bush. Of course, a more important factor in ISIS’s creation was the US and its allies arming the radical opposition in Syria.
• Clinton feigns concern over the national debt and how much Trump would increase it. She then shortly announces her intention of making college debt-free, among other very costly proposals. I guess those wouldn’t add to the debt somehow.
• Trump briefly criticizes Clinton’s “cavalier” nature about Russia in response to a question on nuclear weapons. But instead of driving the point home, he makes the point that Russia’s arsenal is better because ours is too old, hinting at support for a modernization plan. Even worse, he goes on to criticize the Iran Deal, which is one of the few positive achievements of the Obama Administration, and which Hillary isn’t really responsible for anyways. (It only happened after a considerably less hawkish Secretary of State took over.)

You get the idea. The presidential race to the bottom was in top gear last night, but it remains to be seen who won.

On the plus side, it’s our opinion that both of these candidates will unintentionally offer a substantial upside. In case you need a shot of hope after watching last night’s proceedings, we’d recommend the case for political optimism as an antidote. Here’s part 1 and part 2.

Are We Responsible for the Crimes of Our Government?

The preamble to the US Constitution famously begins with “We the People”. And we learn growing up that our government is based on the consent of the governed. We did vote for them after all, or had the opportunity to do so (at least, most of us did).

Thus, a question naturally arises. When government commits crimes, are we responsible?

Obviously, the government actor committing the crime is at fault. So too, is anyone else in the government who ordered them to do it. But where does that line of thinking stop? If a politician ordered the scheme, are all of their supporters to blame? What about people who did not vote? What about people who voted against them but failed to prevail?

The answer might not be immediately obvious. Indeed, a friend of mine recently suggested that we Americans are all culpable for the actions and misdeeds of our government. I can’t say for sure whether he sincerely holds this view or was merely referencing it for rhetorical effect. Either way, the idea is interesting enough to warrant further examination.

Given the quite voluminous nature of the US government’s crimes, both historical and ongoing, it is depressing to imagine we are all responsible for them. (As an aside, this volume of crimes is why I find it difficult to get up in arms about the latest tax-dodging scandal. If my government is involved in oppressing people all the time, why would I want it to have more funding?)

On the other hand, there is something appealing about blaming “We the People”. If you’re concerned about political apathy as I am, this tactic offers a potential cure where self-interest has failed. What better motivation exists than the notion that you are personally responsible for the extensive suffering caused by the US government? Time to get out there and try to fix it. Now!*

But while this is tempting rhetorically, is it actually true? A closer consideration reveals it is not. There are a few reasons for this.

Your Vote Doesn’t Matter

Normally, when we think of responsibility and blame, we think in terms of cause and effect. To say someone is responsible for a given outcome, is to say that their own action, or that of their subordinate(s), caused the result. And without that action, the result would not have occurred.

For example, Person A punches Person B in the face and B gets a black eye. A is responsible for B’s black eye. If A had not thrown a punch, then B would not have a black eye.

That example is straightforward. What if we complicate it slightly? Suppose A has a grudge against B and hopes something bad happens to him. Next, B clumsily walks into a street sign and receives a black eye. A might be delighted by this event when he learns of it and we might think him mean-spirited for wishing harm on his fellow. But he is not responsible for the black eye. Even without A’s ill-wishes, B would have still come to harm.

Our alphabetical hypotheticals are actually quite analogous to the way that voting works. Most elections and ballot initiatives are not literally decided by one or two votes. Even the closest elections typically have at least hundreds of votes as the margin of victory.

If we assume for a moment that a particular election outcome could directly and predictably lead to a terrible outcome, our hypothetical voter is still off the hook. The average voter (or non-voter) can only reliably change their own voting behavior, not everyone else’s.

Imagine a vote was held between a clear pro-war candidate (say, John McCain) and a clear pro-peace candidate (say, Dennis Kucinich)–with John McCain naturally representing the disastrous option. If the election is decided by say 300 votes, the analysis is similar to our second scenario between A and B.

Even if a McCain voter switched to Kucinich, the pro-war McCain would still win, and the nation would shortly be off to war with Iran. If an individual voter switched sides, the only thing that would change would be the margin of victory from 300 down to 298 (assuming a binary election). This does not matter at all.

Given this scenario, we clearly cannot say the McCain voter or the non-voter is responsible for the resulting war. For even if they’d behaved differently, McCain would have still been elected, and the war still would have occurred.

The calculation is a little different for a person with a large audience who has a real shot at influencing numerous votes, as a popular political pundit might. In that case, we might be able to credibly give them credit or blame for a given election result if it were close enough. But again, this does not apply to the average American voter.

Government’s Free Will

Another problem with blaming “We the People” is that it ignores the independent decision-making of government personnel. It might be nice to imagine the government as a monolithic entity that automatically implements the will of the people. In fact, the will of the people, such as it is, must be implemented by human government employees that have the same follies as the rest of us. These government actors also have unique incentives–that may or may not be in line with the interests of the population at large.

This accounts for corruption. No one knowingly votes for corruption, and yet, it still exists. If government is just fulfilling the voter’s wishes, this makes no sense. If government actors are flawed humans with occasionally bad incentives, it makes perfect sense.

This offers another reason to exonerate the average citizen. Government actors frequently act in violation of voter preferences, campaign promises, and even existing laws. As a result, the random citizen, voter or not, cannot possibly be liable for such rogue behavior.

The Extremes

It is useful to consider the logical extension of the notion at hand. If we believe the people are responsible for the actions of their government, there are a great many random and awful things we have to explain. Amongst other things, people my age (millennials) would be responsible for:

• Police brutality
• The Libyan War
• The Yemen War
• The ongoing Drug War
• Extrajudicial assassinations
• Torture
• Indefinite detention
• The devastation of Somalia
• Etc.

Meanwhile, our elders would have a substantial burden as well:

• Nuking Japan. Twice.
• Interning Japanese-Americans
• The Vietnam War
• The instability in Cambodia and eventual genocide
• Jim Crow Laws
• Etc.

Many of the policies described above were covert, so voters could not have supported them even if they wanted to. But as we have seen, voting confers little responsibility.

To drive home the absurdity, ask yourself this: Are your grandparents responsible for nuking Japan? A political science professor might be able to say yes to that. But common sense offers a resounding no.

Leaving Doesn’t Help

Finally, it may be suggested that the best solution would be to just “vote with your feet” and leave. If you don’t consent to your government’s policy, go live under a better government.

It could be superficially persuasive, but this is ultimately irrelevant to the question of responsibility. If you’re an American citizen now, so the argument would go, you are already culpable at least for the crimes carried out by the government in your lifetime (or at least since you were of voting age). Provided this is so, leaving could only prevent future responsibility. It wouldn’t exonerate you for the liability already incurred.

If you already committed theft, vowing to never commit theft again is nice. But it doesn’t resolve the prior offense. By that same reasoning, leaving can’t solve the moral conundrum at hand.

Summing Up

Admittedly, I’m not sure if anyone truly buys the idea that “we are the government”. But one can’t avoid encountering rhetoric that implicitly relies on this notion, and it’s important to understand why it’s wrong.

We may hope that people will be engaged in the political process to help reduce some of the harms caused by government. But the fact remains that even the most apathetic American is not responsible for the crimes of the US government.

*In fairness to my friend, I should note he doesn’t actually make pompous statements like this.

Boeing, Airbus Accidentally Making Progress on Peace with Iran

It’s not often that well-heeled lobbyists are working in the service of the common good. But this is one of those times.

The Story

The US Treasury Department just granted first licenses to Boeing and AirBus to permit them to sell civilian airplanes to Iran. The latest development is part of the slow lifting of sanctions against Iran after the nuclear agreement was implemented earlier this year. Each company has announced separate contracts with Iran worth up to $25 billion, as a Iran seeks to upgrade its aviation technology–which was largely frozen in time by the Iranian Revolution and Iran’s subsequent loss of access to international markets.

Read Yahoo’s take for the relevant details on the airplane deals, if you’re interested:

Airbus, Boeing Granted US License to Sell Planes to Iran
You may also be interested in our longer take on this story when it first came out. (I’m pleased to say that, so far, our prediction is working out well):

Defense Contractor Lobbies for…Peace and Trade?

Why This Matters

If you happen to travel to Iran, this story is a good sign that Iran’s airlines will soon become safer. Additionally, if you’re an employee at Boeing or Airbus, this is good news for you too–as both companies are one step closer to locking in a substantial amount of business.

But while both these outcomes are positive for the people they affect, the political benefits from the airplane deals are likely to benefit all of us. As Bloomberg notes, the Boeing deal represents the largest contract by an American company in Iran since Islamic Revolution in 1979.

Of course, CNN’s horrible priorities notwithstanding, there’s no particular reason for regular Americans to care that a random US company is making profits and employing people. However, Americans should care about the possibility of war with Iran, and want the chance of that happening to be as low as possible.

That’s the real reason the Boeing deal matters. Obviously, this deal can only proceed if the US remains on relatively peaceful terms with Iran. As such, Boeing has 25 billion reasons to lobby for trade instead of sanctions, peace instead of war. Given Boeing’s extensive influence in Congress as a defense contractor, this is especially important.

Indeed, the US Treasury Department’s decision to grant the licenses may already be reflecting the fruit of Boeing influence. The US government has generally dragged its heels on most aspects of Iranian sanctions relief, and Congress is considering possible options to try and kill the Boeing deal legislatively. Of course, this is a bit ironic. The same Congress that overwhelmingly approves of arms sales to a country fighting an aggressive war (Saudi Arabia) is trying to block a commercial sale of civilian airplanes to a country that is not currently waging an aggressive war (Iran).

In any case, the Obama Administration has allowed the airplane deal to proceed one step closer to becoming a reality. For this at least, we can be thankful. 

The whole thing reminds me of an old quote about foreign policy and trade:

When goods don’t cross borders, armies will.

Today, let’s hope a modern variation of the quote proves true:

When Boeing profits off trade, sanctions will go away.

The Senate Tries (and Fails) to Oppose Weapons Sales to Saudi Arabia

The proposal was defeated in a landslide. But the real news is the fact that there was a vote at all. Is this a sign of positive change in the Senate on Saudi Arabia and the Yemen War?

The Story

The Senate held a vote on a resolution against a new $1.15B weapons sale to Saudi Arabia that was announced last month. In all likelihood, the new weapons will be used as part of Saudi Arabia’s ongoing Yemen War. The Yemen War is being backed by the US with diplomatic cover, weapons supplies, and logistical support.

Given this backdrop, the bipartisan resolution was seen as an indirect vote on the Yemen War itself. Based on President Obama’s track record, it should be no surprise that US participation in the Yemen War has not been voted on or authorized by Congress at any other time.

For more on the Senate vote and the details, we recommend this write-up from The Intercept:

27 U.S. Senators Rebel Against Arming Saudi Arabia

Why This Matters

The Saudi arms sales only matter because of the Yemen War. In spite of an apparent firepower advantage, the Saudis seem to be losing that conflict, which has dragged on for roughly a year and a half. And because the Saudis are highly dependent on the US for aid, weapons, and technical support, it’s possible that the war would end quickly if the US withdrew that support. That’s what this resolution was really about–it could have been the first step towards ending the US policy of unconditional support for Saudi Arabia and potentially help bring the Yemen War to a close by default.

The end of the Yemen War cannot come too soon. In this conflict, the US is backing Saudi Arabia against the Houthi rebel group, but the Houthis just so happen to be a mortal enemy of Al Qaeda and ISIS. Thus, as is so often the case, the US-backed coalition is de facto fighting on the same side of the conflict as Al Qaeda / ISIS. The war has seen these jihadist groups grow considerably as a result. Moreover, the stated goal of the war is to reinstall a “president” who came to power after a US-sponsored election that featured only one candidate. Not exactly democracy at work.

In short, the US has managed to be on the wrong side in virtually every way in Yemen. Once we we start leaving that country alone–and start letting Saudi Arabia fight its own wars–only then will Yemen have a chance to recover.

Want To Create Thousands of Criminals Overnight? Just Ask the DEA

The US Drug Enforcement Agency has decided to make another plant illegal in the US. But the harm caused by prohibition is almost certain to be worse than the alleged harm caused by the plant itself.

The Story

The plant in question is called kratom. According to the DEA itself, the plant is used variously to treat “chronic pain and opioid withdrawal symptoms, with users reporting its effects to be comparable to prescription opioids.” It is also reportedly used by some as a recreational drug. Up until now, the plant has been completely unregulated, and growing in popularity. The new DEA decision will place kratom in the same legal category as heroin and ecstasy.

For more on this story, we recommend this write-up from Reason, which explains exactly how the DEA arrived at its conclusion that this plant was an “imminent hazard to public safety”. Spoiler, they assumed their own conclusion:

The DEA Thinks All Kratom Use Is Abuse

And if you’re in the mood to get real good and angry about it, here’s a second article which discusses the DEA’s incredible response to the outrage their announcement has inspired. This piece also explains why, once the substance is banned, the ban becomes self-perpetuating.

After Banning Kratom, DEA Says It Might Be a Useful Medicine

Why This Matters

This story highlights absurdity of drug prohibition. In this case, the DEA is effectively telling thousands of kratom consumers that they are incapable of making their own decisions about their health. Instead, the DEA knows what’s in the best interest of each and every American–and that is to completely abstain from consuming a natural substance that has been used by humans for thousands of years.

Recreational users might be able to switch to another substance, but the DEA’s decision will leave many medicinal users of the plant in a lurch. They can choose to continue using kratom and become a criminal, or they can switch to an alternative remedy that they find less desirable than kratom–perhaps due to cost, side effects, inadequate relief, etc. Whatever the reason, kratom users now face a deeply unpleasant choice that was entirely unnecessary. No doubt, at least some will choose to continue taking kratom, and hundreds or perhaps thousands of nonviolent felons will be ushered into existence come October 1, 2016. (Note, it’s difficult to find precise data on kratom usage, but a petition opposing the ban rapidly gained more than 100,000 signatures, suggesting its US users number at least in the thousands.)

This story is also a textbook example of a victimless crime. Purchasing kratom from a willing seller is a voluntary exchange in which both parties gain something of value. Consuming kratom is another act that only directly affects the user who chose to consume it. No force is used, no victim is created, and no rights are violated in either of these acts. The DEA is going to make them illegal anyways.

But while kratom consumers will certainly be harmed by this legislation, there are some winners. Obviously, the DEA benefits from having an expanded mission, and a new batch of “criminals” to pursue and seize assets from. The other winners are the pharmaceutical companies, who will benefit from higher demand now that a competing product has been confined to the black market by the DEA. And really, what matters more? Protecting profits of Big Pharma from competion or the freedom and well-being of regular Americans that chose an alternative medicine? It’s nice to see the DEA has its priorities straight.

Two Major Candidates, Zero Solutions for Terrorism

Facts are still coming out about the New York and New Jersey bombings. But from the information we do have, one thing is clear: the counterterror solutions promoted by Trump and Clinton would not have helped prevent it.

Background

Two bombs exploded in New York City and New Jersey this past Saturday. No one was killed in either incident though 29 people were injured in the New York blast. Additionally, a series of similar explosive devices were found elsewhere in New York and New Jersey, all of which failed to detonate as intended. You can read more on the details of the bombings here.

The lead suspect in the case was taken into custody over the weekend after a shootout with police. The suspect has been identified as Ahmad Khan Rahami, a 28-year-old American citizen who was originally born in Afghanistan. He appears to be the prime suspect in both the New Jersey and New York bombings.

It must be emphasized that facts in this story are rapidly changing. And while the fact that Rahami shot at police suggests he was involved in some kind of criminal behavior, it is not certain that he was responsible for all of the bombings at this early stage. And obviously, even if the evidence against him becomes overwhelming, he should be prosecuted in a fair trial like any other suspected criminal.

Who is the suspect?

Disclaimer aside, the prevailing media narrative surrounding this story is quite confident that Rahami is the perpetrator behind the attacks. And this popular narrative of the weekend’s events is what the presidential candidates are responding to. For this reason, it’s worth understanding more about the lead suspect.

According to CNN, Rahami immigrated to the US from Afghanistan when he was 7 years old in 1995. He became a formal US citizen in 2011.

He had reportedly visited Afghanistan and Pakistan multiple times in recent years. His most recent trip was a one-year stint in Pakistan from April 2013 to March 2014. Rahami was questioned by the US government each time upon his return as a standard procedure. They did not identify any warning signs of radicalization.

Rahami married a Pakistani woman in 2011, depending on the source. In 2014, he attempted to petition for her to join him in the US, but ran into various bureaucratic obstacles in the immigration process. It’s not clear whether his petition for his wife was ever ultimately successful.

Rahami’s family owns a restaurant in New Jersey, near where some of the bombs were found. The restaurant had filed a lawsuit against local officials alleging that they were being discriminated against because they were Muslim. The lawsuit was decided in favor of the city.

Trump’s Solutions

Donald Trump’s remarks on the attacks centered around two core themes:

• The need for “extreme vetting” and more strict immigration controls
• The need for harsher punishments and less due process for terrorism suspects, which he referred to as “foreign enemy combatants”

The demand for tighter immigration security has been a staple of the Donald Trump campaign. In this case, however, it is not relevant to the problem at hand.

As noted above, Rahami immigrated to the United States when he was 7 years old, and he became an actual US citizen prior to his most suspicious trip to Pakistan. Moreover, in spite of his US citizenship, Rahami was questioned by US officials when he returned from his trips abroad. Presumably, that is precisely what a tight immigration security procedure would entail.

For stricter immigration procedures to offer a solution to the present attacks, Trump’s plan would have to involve one of the following:

• Banning children as young as 7 as potential terrorists, provided they meet other criteria for exclusion (nationality, religion, etc.)
• Preventing US citizens from returning to the US if they travel to places that are off-limits

The first point seems obviously absurd, even for Donald Trump. Meanwhile, Trump has already said previously that US citizens would not be prevented from returning to the US–even if they had the audacity to believe in one of the world’s most prevalent religions.

Likewise, Trump’s call for harsher, more efficient punishments for the suspect might satisfy some kind of thirst for vengeance. But it is highly unlikely they will have any beneficial impact on reducing terrorism.

After all, the threat of harsh punishment is presumably meant to be a deterrent for someone who is considering committing a crime. But for the deterrent to work, the potential criminal must be thinking rationally and must have a healthy concern for self-preservation. Based on the facts we know currently, it doesn’t appear Rahami would meet either standard.

Politicians and government personnel excepted, a rational person doesn’t commit massive acts of violence against random individuals that he’s had no interactions with. Yet, in the case of the New York bombing, that’s what the suspect stands accused of. Likewise, a person concerned about protecting his own life, doesn’t participate in a gun battle with police.

Given these facts, there’s no plausible way in which harsher punishments would reduce the likelihood of terrorist attacks like these. And this is obvious based solely on the information that has been widely reported by the mainstream media.

Clinton’s Solution

Clinton’s response to the attacks uses less inflammatory language, but the content of the proposals is equally objectionable. Her pitch contained three key components:

• She stressed her experience, invoking President Obama and the Orwellian term “direct kinetic action”–suggesting her intent to continue many Obama Administration policies
• She wants “tough vetting” just like Trump does
• She wants to ramp up intelligence gathering with the help of Silicon Valley companies

It would make sense for Clinton to highlight her experience combating terrorism if the 15-year War on Terror was going well. But what honest observer could possibly believe that? It’s true that the Middle East was in chaos in 2008, when President Obama was elected (and incidentally, that chaos stemmed significantly from the Iraq War that Clinton supported). But 2008 looks almost peaceful compared to the situation that confronts the candidates in 2016. Iraq, Afghanistan, and Somalia were in chaos in 2008. Now Syria, Libya, and Yemen can be added to that list. That is not progress.

On immigration, Clinton has effectively adopted a similar policy to Trump. She will discuss refugees less and de-emphasize Islam, both of which are commendable, but the resulting restrictions implied are certainly in the same ballpark as Trump’s vague proposals.

Finally, perhaps the most terrifying part of Clinton’s program is her emphasis on working with Silicon Valley to detect radicalization online. Like Trump’s immigration ideas, this notion makes little sense in the context of the present case.

As The New York Times reports, Rahami did not keep much of a social media presence. Officials described him as a “ghost”. Additionally, current indications are that no government agency suspected Rahami of being a terror threat.

Thus, the best case scenario for Clinton’s remarks is that she’s simply ignorant of the case at hand. If Rahami did not have a much of an online presence, then paying Silicon Valley companies (donors?) to help parse and analyze that presence would be of little use.

Perhaps Clinton is really calling for Silicon Valley partnerships to sweep up and analyze even more communications of everyone. This is the more nefarious possible interpretation of her plan. Again, if it were designed to address this specific case, it would mean collecting the communications of all US citizens for the government and having corporate tech partners sift through it for signs of radicalization.

This would be another major blow for civil liberties, and it’s not even clear that it would help prevent terrorist attacks anyway. After all, the National Security Agency already does this to some extent and has thwarted zero terrorist attacks with its powers. Why would next time be different?

Summary

In the wake of the recent bombings in New York and New Jersey, Americans will be looking for a presidential candidate that offers credible solutions to terrorism. Trump and Clinton do not meet that standard.

Instead, their proposals are almost completely irrelevant to the case at hand and mere reiterations of ideas they’ve already long since decided on. The fundamental assumptions of the 15 year War on Terror go unchallenged.

Under either candidate’s plans, government power will expand and civil liberties will retreat ever further, but the risk of terrorism and blowback will remain.Facts are still coming out about the New York and New Jersey bombings. But from the information we do have, one thing is clear: the counterterror solutions promoted by Trump and Clinton would not have helped prevent it.

Background

Two bombs exploded in New York City and New Jersey this past Saturday. No one was killed in either incident though 29 people were injured in the New York blast. Additionally, a series of similar explosive devices were found elsewhere in New York and New Jersey, all of which failed to detonate as intended. You can read more on the details of the bombings here.

The lead suspect in the case was taken into custody over the weekend after a shootout with police. The suspect has been identified as Ahmad Khan Rahami, a 28-year-old American citizen who was originally born in Afghanistan. He appears to be the prime suspect in both the New Jersey and New York bombings.

It must be emphasized that facts in this story are rapidly changing. And while the fact that Rahami shot at police suggests he was involved in some kind of criminal behavior, it is not certain that he was responsible for all of the bombings at this early stage. And obviously, even if the evidence against him becomes overwhelming, he should be prosecuted in a fair trial like any other suspected criminal.

Who is the suspect?

Disclaimer aside, the prevailing media narrative surrounding this story is quite confident that Rahami is the perpetrator behind the attacks. And this popular narrative of the weekend’s events is what the presidential candidates are responding to. For this reason, it’s worth understanding more about the lead suspect.

According to CNN, Rahami immigrated to the US from Afghanistan when he was 7 years old in 1995. He became a formal US citizen in 2011.

He had reportedly visited Afghanistan and Pakistan multiple times in recent years. His most recent trip was a one-year stint in Pakistan from April 2013 to March 2014. Rahami was questioned by the US government each time upon his return as a standard procedure. They did not identify any warning signs of radicalization.

Rahami married a Pakistani woman in 2011, depending on the source. In 2014, he attempted to petition for her to join him in the US, but ran into various bureaucratic obstacles in the immigration process. It’s not clear whether his petition for his wife was ever ultimately successful.

Rahami’s family owns a restaurant in New Jersey, near where some of the bombs were found. The restaurant had filed a lawsuit against local officials alleging that they were being discriminated against because they were Muslim. The lawsuit was decided in favor of the city.

Trump’s Solutions

Donald Trump’s remarks on the attacks centered around two core themes:

• The need for “extreme vetting” and more strict immigration controls
• The need for harsher punishments and less due process for terrorism suspects, which he referred to as “foreign enemy combatants”

The demand for tighter immigration security has been a staple of the Donald Trump campaign. In this case, however, it is not relevant to the problem at hand.

As noted above, Rahami immigrated to the United States when he was 7 years old, and he became an actual US citizen prior to his most suspicious trip to Pakistan. Moreover, in spite of his US citizenship, Rahami was questioned by US officials when he returned from his trips abroad. Presumably, that is precisely what a tight immigration security procedure would entail.

For stricter immigration procedures to offer a solution to the present attacks, Trump’s plan would have to involve one of the following:

• Banning children as young as 7 as potential terrorists, provided they meet other criteria for exclusion (nationality, religion, etc.)
• Preventing US citizens from returning to the US if they travel to places that are off-limits

The first point seems obviously absurd, even for Donald Trump. Meanwhile, Trump has already said previously that US citizens would not be prevented from returning to the US–even if they had the audacity to believe in one of the world’s most prevalent religions.

Likewise, Trump’s call for harsher, more efficient punishments for the suspect might satisfy some kind of thirst for vengeance. But it is highly unlikely they will have any beneficial impact on reducing terrorism.

After all, the threat of harsh punishment is presumably meant to be a deterrent for someone who is considering committing a crime. But for the deterrent to work, the potential criminal must be thinking rationally and must have a healthy concern for self-preservation. Based on the facts we know currently, it doesn’t appear Rahami would meet either standard.

Politicians and government personnel excepted, a rational person doesn’t commit massive acts of violence against random individuals that he’s had no interactions with. Yet, in the case of the New York bombing, that’s what the suspect stands accused of. Likewise, a person concerned about protecting his own life, doesn’t participate in a gun battle with police.

Given these facts, there’s no plausible way in which harsher punishments would reduce the likelihood of terrorist attacks like these. And this is obvious based solely on the information that has been widely reported by the mainstream media.

Clinton’s Solution

Clinton’s response to the attacks uses less inflammatory language, but the content of the proposals is equally objectionable. Her pitch contained three key components:

• She stressed her experience, invoking President Obama and the Orwellian term “direct kinetic action”–suggesting her intent to continue many Obama Administration policies
• She wants “tough vetting” just like Trump does
• She wants to ramp up intelligence gathering with the help of Silicon Valley companies

It would make sense for Clinton to highlight her experience combating terrorism if the 15-year War on Terror was going well. But what honest observer could possibly believe that? It’s true that the Middle East was in chaos in 2008, when President Obama was elected (and incidentally, that chaos stemmed significantly from the Iraq War that Clinton supported). But 2008 looks almost peaceful compared to the situation that confronts the candidates in 2016. Iraq, Afghanistan, and Somalia were in chaos in 2008. Now Syria, Libya, and Yemen can be added to that list. That is not progress.

On immigration, Clinton has effectively adopted a similar policy to Trump. She will discuss refugees less and de-emphasize Islam, both of which are commendable, but the resulting restrictions implied are certainly in the same ballpark as Trump’s vague proposals.

Finally, perhaps the most terrifying part of Clinton’s program is her emphasis on working with Silicon Valley to detect radicalization online. Like Trump’s immigration ideas, this notion makes little sense in the context of the present case.

As The New York Times reports, Rahami did not keep much of a social media presence. Officials described him as a “ghost”. Additionally, current indications are that no government agency suspected Rahami of being a terror threat.

Thus, the best case scenario for Clinton’s remarks is that she’s simply ignorant of the case at hand. If Rahami did not have a much of an online presence, then paying Silicon Valley companies (donors?) to help parse and analyze that presence would be of little use.

Perhaps Clinton is really calling for Silicon Valley partnerships to sweep up and analyze even more communications of everyone. This is the more nefarious possible interpretation of her plan. Again, if it were designed to address this specific case, it would mean collecting the communications of all US citizens for the government and having corporate tech partners sift through it for signs of radicalization.

This would be another major blow for civil liberties, and it’s not even clear that it would help prevent terrorist attacks anyway. After all, the National Security Agency already does this to some extent and has thwarted zero terrorist attacks with its powers. Why would next time be different?

Summary

In the wake of the recent bombings in New York and New Jersey, Americans will be looking for a presidential candidate that offers credible solutions to terrorism. Trump and Clinton do not meet that standard.

Instead, their proposals are almost completely irrelevant to the case at hand and mere reiterations of ideas they’ve already long since decided on. The fundamental assumptions of the 15 year War on Terror go unchallenged.

Under either candidate’s plans, government power will expand and civil liberties will retreat ever further, but the risk of terrorism and blowback will remain.