- the diversion of funds from the Troubled Assets Relief Program by two administrations for purposes unauthorized by Congress;
- the looting and redistribution of claims against GM’s and Chrysler’s assets from shareholders and debt-holders to pensioners;
- the use of questionable tactics to bully stakeholders into accepting terms to facilitate politically desirable outcomes;
- the unprecedented encroachment by the executive branch into the finest details of the bankruptcy process to orchestrate what bankruptcy law experts describe as “sham” sales of Old Chrysler to New Chrysler and Old GM to New GM;
- the costs of denying Ford and the other more deserving automakers greater market share and access to GM’s and Chrysler’s best workers and capital;
- the costs of insulating irresponsible actors, such as the United Auto Workers, from the outcomes of an apolitical bankruptcy proceeding, and;
- the diminution of U.S. moral authority to counsel foreign governments against similar market interventions, to name some.
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Trade Policy
Industrial Policy Courtesy of the Cromnibus…Because No More Inferior Potassium
![Media Name: magnitogorsk_2.png](/sites/cato.org/files/styles/pubs_2x/public/wp-content/uploads/magnitogorsk_2.png?itok=Uh0bqSp_)
Though a monument to the ravages of Soviet central planning, the barren Magnitogorsk steel works complex still inspires America’s industrial policy proponents. “Failure to plan is a plan for failure,” said comrade Rep. Dan Lipinski (D‑IL), as he described the “pro-manufacturing” legislation he helped slip into the mammoth Cromnibus bill, which became law this month.
The Revitalize American Manufacturing and Innovation Act directs the Secretary of Commerce to establish a “Network for Manufacturing Innovation” to:
- improve the competitiveness of U.S. manufacturing and increase production of goods manufactured predominately within the United States;
- stimulate U.S. leadership in advanced manufacturing research, innovation, and technology;
- accelerate the development of an advanced manufacturing workforce; and
- create and preserve jobs
Of course, the verbs “revitalize,” “improve,” “stimulate,” “accelerate,” “create,” and “preserve” are euphemisms for protect, subsidize, regulate, and intervene.
How Long Is the TPP Going to Take?
We were once told that the Trans-Pacific Partnership would be completed by the end of 2013. Then it was early 2014, then late 2014, or probably sometime before 2015, or in early 2015 for sure. At this point, only two things are certain: you shouldn’t believe any predictions about the TPP, and the TPP is taking a really, really long time.
To get an idea for how long the TPP is taking, consider this graph put out by the Peterson Institute earlier this month showing the negotiation and ratification times for previous free trade agreements:
![Peterson FTA graph](/sites/cato.org/files/styles/pubs_2x/public/wp-content/uploads/peterson_graph.jpg?itok=Ssi00xVy)
The argument they’re trying to make with this graph is that the United States needs to pass trade promotion authority to make sure the TPP doesn’t get bogged down in Congress (the red line) after negotiations finally conclude. They may be right, but I think it also tells us quite plainly that quick ratification of the TPP, with or without trade promotion authority, is an unrealistic expectation.
Here’s the same data presented with the negotiation and ratification times stacked on top of each other and with the current progress of the TPP (and TTIP) included:
![timetable with TPP](/sites/cato.org/files/styles/pubs_2x/public/wp-content/uploads/tpp_better_timetable.jpg?itok=zsBpclQG)
As you can see, the TPP negotiations are taking an unprecedentedly long time to complete.
Undaunted by the failure of previous predictions, the U.S. Trade Representative is now claiming that the negotiations will conclude and the whole deal can be passed by Congress before the end of 2015. That would be an impressively abrupt end to a long project, with a blue and red line total of just under 70 months.
It’s possible that passing trade promotion authority will bring much needed energy to the TPP process. Hopefully, USTR is right, and Congress will pass trade promotion authority, the TPP negotiations will conclude, and the ratification will be swift.
It seems more likely, however, that the TPP is a trade policy quagmire the United States entered into with overly ambitious goals and inadequate resolve to see them met. There’s a lot more than just the lack of trade promotion authority keeping the TPP negotiations from concluding. And you might notice from the graph above that, even with trade promotion authority in place, the most recent trade agreements lingered in Congress for a very long time after the negotiations were completed.
Maybe I’m wrong. Maybe the stars are about to align for the TPP. But if I’m right, how long do we have to wait before we rethink our strategy?
Internationalists vs. Isolationists
Last week, I had a piece in Townhall in which I criticized those who call libertarians “isolationists.” I explained the various ways libertarians are just as internationalist, if not more so, than those of other political persuasions. The recent Rand Paul-Marco Rubio back and forth on President Obama’s new Cuba policy helps illustrate the point. Here is the Washington Post summarizing the exchange:
Hawkish Republicans have long called Paul’s foreign policy “isolationist,” a label he rejects. In this week’s Cuba debate, Paul applied the label to Rubio.
Paul’s comments were unusually personal, beginning with a series of tweets aimed at Rubio followed by a two-paragraph message on his Facebook page. “Senator Rubio is acting like an isolationist” and “does not speak for the majority of Cuban-Americans,” he wrote.
Paul followed up with an op-ed on Time’s Web site Friday afternoon in which he wrote that he grew up learning to despise communism but over time concluded that “a policy of isolationism against Cuba is misplaced and hasn’t worked.” He noted that public opinion has shifted in favor of rapprochement — especially among young people, including young Cuban Americans — and that U.S. businesses would benefit by being able to sell their goods in Cuba.
…
Rubio responded to Paul’s comments Friday evening, telling conservative radio host Mark Levin, “I think it’s unfortunate that Rand has decided to adopt Barack Obama’s foreign policy on this matter.”
I don’t think there can be much doubt that Paul’s approach of engagement with Cuba is internationalist, not isolationist. The Rubio approach is harder to define. It can be seen as isolationist, in a sense; alternatively, it could be some sort of aggressive, interventionist — and ineffective — internationalism. Either way, the Cuba issue is a good illustration of how libertarians are not isolationists, and hopefully this will put an end to that mistaken characterization.
Republicans in Congress Really Like the Cuba Embargo
President Obama made a number of spot-on arguments yesterday for why the United States should end the ineffective trade embargo that has helped impoverish the people of Cuba for over fifty years. However, the core components of the embargo are statutory law that will require an act of Congress to overturn. While it’s very encouraging to see the president take a leadership role in pursuit of a good policy, getting Republicans on board is going to be difficult to say the least.
Over the last 20 years, there have been 11 votes in the two houses of Congress seeking to eliminate or amend the Cuba embargo. In all of those votes, loosening the embargo got majority opposition from Republicans. According to Cato’s trade votes database, it wasn’t even close. Republican support for the embargo has ranged from 61% (in support of travel ban) to 91% (in support of import ban) with the average level of support at 77.5%. Indeed, in 2005 more Republicans voted to withdraw the United States from the World Trade Organization than voted to end the Cuba embargo.
That’s not to say that positive movement on the embargo in a Republican congress is impossible. There are encouraging signs as well: shifting opinion among Cuban Americans alters the electoral politics of the embargo in favor of opposition; resurgent emphasis on free markets may temper the Republican party’s reflexive love for belligerent foreign policy; and long-time Republican opponents of the embargo will now have renewed energy.
In practical terms, embargo opponents will need to persuade House leadership to schedule a vote and find enough support in the Senate to overcome an inevitable filibuster from Marco Rubio and others. It may not be impossible, but there’s a lot of heavy lifting left to do. Hopefully, the President’s actions will be enough to get the ball rolling toward more reform of this antiquated and harmful policy.
Time to Trade with Cuba: Regime Change through Sanctions Is a Mirage
President Barack Obama used negotiations over a couple of imprisoned Americans to refashion the entire U.S.-Cuba relationship. He aims to reopen the embassy, relax trade and travel restrictions, and improve communication systems.
Sen. Marco Rubio of Florida charged the administration with appeasement because the president proposed to treat Cuba like the U.S. treats other repressive states. But President Obama only suggested that government officials talk to one another. And that peoples visit and trade with one another.
More than a half century ago Fidel Castro took power in Havana. In the midst of the Cold War the Kennedy administration feared that Cuba would serve as an advanced base for the Soviet Union. Having tried and failed to overthrow the regime militarily, Washington saw an economic embargo as the next best option.
But that didn’t work either. Even after the Soviet Union collapsed and Moscow ended subsidies for Cuba, sanctions achieved nothing.
Today Cuba’s Communist system continues to stagger along. The only certainty is that economic sanctions have failed.
Failed to bring down the regime. Failed to liberalize the system. Failed to free political prisoners. Failed to achieve much of anything useful.
After more than 50 years.
But that should surprise no one. Sanctions are most likely to work if they are universal and narrowly focused. For instance, the Institute for International Economics found that economic sanctions did best with limited objectives, such as “modest” policy change.
The Airbus Beluga: How Bad Government Makes Cool-Looking Things Sometimes
While government intervention often makes people’s lives worse, it can sometimes have aesthetically valuable side effects. For example, ancient pyramids are true marvels of human engineering, feudal despotism, and slave labor. Also, I’ll admit I’ve always enjoyed the iconic image of 1950s American cars in Cuba, which exist today because Cubans largely have been forbidden from buying new cars for over half a century.
![Cuban Cars](/sites/cato.org/files/styles/pubs_2x/public/wp-content/uploads/web-cuba-cars01_1325782cl-8.jpg?itok=VD_FqU9W)
A more modern consequence of big government causing cool things to happen is the existence of the Airbus Beluga Super Transporter. The Beluga exists because Airbus manufactures different parts of its planes in different European countries. Why does it do this? Subsidies! Lots of subsidies.
Airbus is based in France, where most of its planes are assembled. But the company is also subsidized by the United Kingdom, Germany, and Spain, and they each get at least one factory that makes some airplane component. In order to transport giant airplane parts like fuselages and wings from country to country, Airbus has designed a plane for the sole purpose of carrying plane parts between its factories.
![Airbus Beluga](/sites/cato.org/files/styles/pubs_2x/public/wp-content/uploads/airbus-beluga-nr1_l3929.jpg?itok=5x37II4t)
![Hungry Airbus Beluga](/sites/cato.org/files/styles/pubs_2x/public/wp-content/uploads/a_300b4-14a.jpg?itok=ISp_DGrl)
I think it’s pretty cool looking. It’s also absurd. When your business model involves flying airplane parts around Europe in an airplane, it’s very possible you are inadequately concerned about efficiency.