Cato @ Liberty
Margaret Thatcher’s $3 Trillion Revolution
Tue, 21 Feb 2017 12:12 EST

Margaret Thatcher came to power in 1979 determined to revive the stagnant British economy with market-based reforms. During her 11 years as prime minister, she deregulated, cut marginal tax rates, repealed currency exchange controls, and tamed militant labor unions.

However, it was privatization that became Thatcher’s most important and enduring economic legacy. She popularized the word privatization and oversaw the sale to the public of British Airways, British Telecom, British Steel, and British Gas, and other major businesses.

Spurred by the success of Thatcher’s reforms, privatization swept the world. Governments in more than 100 countries moved thousands of state-owned businesses to the private sector. Since the Iron Lady’s campaign to give ownership of Britain’s economy back to the people, more than $3.3 trillion of government businesses have been privatized around the world.

I take a look back at Thatcher’s privatization reforms in this month’s Cato Journal.

What is the relevance for U.S. policymaking today? Many types of businesses that Britain privatized are still partly or fully owned by governments in this country, including airports, seaports, postal services, air traffic control, electric utilities, and passenger rail. So there is an opportunity here for our leaders to spur growth and innovation by adopting Thatcher’s playbook.

But privatization is important for more than just the economic benefits. Thatcher said privatization is also about “reclaiming territory for freedom” and ensuring that “the state’s power is reduced and the power of the people enhanced.”

In toasting Margaret Thatcher in Washington, February 27, 1981, President Ronald Reagan said “everywhere one looks these days the cult of the state is dying.” Thatcher’s privatization program would help make that promise come true.

The photo shows the free-market friends at the White House, February 28, 1981.

Book Forum: Do States With Nukes Have More Coercive Leverage?
Tue, 21 Feb 2017 11:52 EST

There is considerable debate in both academic and policy circles about the utility of nuclear weapons. Of what use are they? Some say just about all nuclear weapons are good for is self defense. States that possess them can more easily deter attack or invasion. Others argue that possessing nuclear weapons also gives states added leverage to get their way in international politics. In this conception, nuclear weapons add to the ability to coerce other states. Not only can they deter actions we don’t like, but they can help compel others to take actions that we do like.

A new and important book, Nuclear Weapons and Coercive Diplomacy by Todd S. Sechser and Matthew Fuhrmann, evaluates the empirical record to test whether or not nuclear weapons aid in coercive diplomacy. Their findings are clear: no, nuclear weapons do not have much coercive utility. States with nukes don’t have more leverage in settling territorial disputes, they’re not more likely to initiate military challenges, they are not more likely to escalate ongoing disputes, and they are not more successful in blackmailing rivals. 

This has significant implications for U.S. foreign policy. What do these findings suggest we should expect from our nuclear-armed rivals, like Russia and China? Does it make sense to undertake preventive military action against nascent nuclear weapons programs in countries like North Korea? If Iran were to get nuclear weapons once the time-limited restrictions in the JCPOA expire (as critics of the deal suggest), how would that influence its behavior in the region?

The authors are coming to the Cato Institute on March 7 to discuss their book and explain their theoretical and empirical findings. Matthew Kroenig will be a discussant and offer comments on the book. You can register to attend the event here

Early Returns on President Trump
Tue, 21 Feb 2017 09:08 EST

During Trump’s surprising presidential campaign, pundits became fond of pointing out that Trump’s supporters took his often-shocking rhetoric seriously, but not literally, whereas his opponents took his rhetoric literally, but not seriously. Today, however, it is obvious that one should take Trump’s words both seriously and literally. In his first month Trump has been busy matching actions to words, temporarily banning immigration from seven Muslim-majority nations and ordering sanctuary cities to detain illegal immigrants, launching work on the U.S.-Mexican border wall, and preparing to lift the ban on the CIA black sites where the United States carried out “enhanced interrogation techniques.”

For those who voted for Trump this first month must surely be a heady viewing experience. For much of the country, however, Trump’s efforts are taking things in the wrong direction, as even his most extreme campaign proposals become reality. From the perspective of the polls, Trump’s first month has met decidedly mixed reviews.

On immigration, for example, Trump signed a short-lived executive order threatening to halt federal funding to so-called “sanctuary cities” that offer protection to illegal immigrants if they do not detain illegal immigrants and turn them over to federal authorities. And before signing two executive orders directing the construction of the U.S.-Mexican border wall, Trump argued that the United States is “in the middle of a crisis border” and that “A nation without borders is not a nation.”

Most Americans see things differently. When asked about illegal immigrants currently living in the United States, a CBS News Poll this month found that 74% of the public thinks they should be allowed to stay, while just 22% thinks they should be required to leave. 61% believe illegal immigrants should eventually be allowed to apply for citizenship. The same poll found that 59% oppose Trump’s plan to build a wall along the U.S.-Mexico border, with 37% favoring it.

On the question of torture Trump faces a polarized public. Just yesterday Trump reaffirmed his belief in the utility of torture, telling an interviewer that the United States must “fight fire with fire” and that “Absolutely I feel it works.” Many Americans, however, are not so sure. A recent poll by the Pew Research Center finds that 49% of the public does not believe there are any circumstances that justify torture; while 48% believes that there are some circumstances that do. When asked about specific interrogation techniques, Americans have tended to be even less supportive. Gallup polls from 2005, for example, found 82% opposed water boarding, 79% opposed keeping prisoners naked and chained in uncomfortable positions. 62% felt it was wrong to threaten to transfer a prisoner to a country know for using torture – relevant given Trump’s order to reestablish overseas CIA black sites, which were used for just such purposes.

On the question of banning Muslims from entering the United States Trump’s support is far from overwhelming. Earlier this month a Quinnipiac University poll found that 48% support suspending immigration from “terror prone regions” compared to 42% who oppose doing so. This represents a slip from the summer of 2016, when a NBC News/Survey Monkey poll taken days after the Orlando nightclub attack found 50% support for Trump’s call for a ban, with 46% opposing.

It is too early to make bold predictions about the popularity of Trump’s policies down the road or what the polls today might tell us about how the polls will look two or four years from now. Even so, though Trump is enjoying the rush of power that comes with the Oval Office, his administration would do well to take these poll numbers both literally and seriously. Racking up policy “wins” that don’t have majority support is a sure way to lose political capital in Washington and a terrible strategy for getting reelected.

This goes double for Trump, given his historically low approval and favorability ratings. Trump is the first elected president with an approval rating under 50% (42% in the latest Gallup poll) and the latest Pew Research Center poll has his net favorable/unfavorable rating at minus 16%. Trump, with his mobile phone and millions of Twitter followers, may believe he can use the bully pulpit to win hearts and minds. In this, however, he will learn that he is sadly mistaken. Scholars of presidential communication have long since shown that presidents with approval ratings below 50% find their ability to move public opinion vastly diminished, if not completely destroyed.

At his current approval levels, it doesn’t matter how many tweets Trump fires off, he is unlikely to turn opposition toward unpopular programs into support. On the other hand, Trump will fare much better as he moves on to policies that enjoy majority support to begin with like his infrastructure package, tax cuts for the middle class, spending more for defense, or improving veterans’ services.

In the final analysis, assessments of Trump’s presidency won’t hinge primarily on attitudes towards specific policies but on the public’s judgments of the broader sweep of economic and social trends over his time in office. And for that we shall have to wait. 


rssfeedwidget.com