One of the few hopeful, “glass-half-full” thoughts I had after Donald Trump won the election in 2016 was that the new president would prove to be the best salesman of free trade since Adam Smith. No, I wasn’t so deluded to think he’d articulate the case for free trade and commit himself to removing all protectionist barriers. On the contrary, I assumed Trump’s reckless deployment of tariffs and other trade restrictions would backfire so spectacularly and expose the folly of protectionism so convincingly that the economically discredited philosophy would become politically radioactive, once and for all.

Well, the absence of any coherent, fresh ideas from the Democratic presidential aspirants that would differentiate their trade policies from President Trump’s suggests that maybe things haven’t played out as I had expected they would. Not yet, anyway.

The cost of Trump’s trade wars (the effects of tariffs on nearly $300 billion of imports and retaliation against nearly $200 billion of exports) has started to register on the Geiger counter, but we’re nowhere near Chernobyl levels yet. The economic pain has been concentrated in a few sectors and regions, and dulled by subsidies, fiscal stimulus, and (as of tomorrow, presumably) monetary stimulus. Of course, as this sugar high wears off and the economy slows, conditions are likely to worsen.

Will the Democrats be prepared to capitalize when this happens? Will any of the party’s presidential aspirants call out Trump’s tariffs? Will any repudiate protectionism? Can any lead the party back to the center on trade? According to all of the major polls, that’s exactly where most Democratic voters reside. It’s where most Republican voters reside, too.

The problem for Democrats is that distancing themselves from Trump’s protectionism means distancing themselves from the prevailing Democratic Party orthodoxy. For the past quarter century, Democrats have been skeptical of—when not outright hostile to—trade and globalization.

In many regards, Trump’s right-wing, protectionist, nationalist trade policies are barely distinguishable from the ideas espoused by the Democratic Party’s anticorporate, protectionist left-wing, who still hold sway over trade policy. Both favor interventions to achieve particular (often identical) outcomes, such as compelling Americans to “Buy American,” limiting imports, penalizing developing countries that don’t adopt rich country labor and environmental standards, taxing outsourcing, impeding labor market adjustment, and halting the alleged encroachment of the dark forces of globalization. To the right, those dark forces are the faceless foreign bureaucrats committed to usurping U.S. sovereignty. The left’s bugaboo are the multinational corporations, hellbent on weakening the rule of law and undermining democracy.

To those seeking the Democratic nomination for president, challenging the party’s protectionist plank may sound risky. After all, the party’s trade policy positions long have been bankrolled by organized labor, which—despite its absurd claims to the contrary—opposes trade liberalization, full stop, regardless of the fact that protectionism hurts U.S. workers (placing my bet here that the AFL-CIO does not endorse the USMCA, even after all of its conditions are met).

Voters on the far left, who will play an outsized role in selecting the nominee, tend to support the party’s protectionist platform because they’ve been misled to believe that trade only benefits big corporations and the rich. Senators Warren and Sanders have been instrumental in perpetuating that divisive fallacy. The facts are that the costs from the diminution of trade opportunities are borne primarily by smaller companies and households with lower incomes.

Protectionism is regressive. Free trade is progressive.

Although the subject was barely broached in the first two Democratic debates, the party’s positions on trade are going to matter in the 2020 election. Those positions will be shaped by debate among the candidates, the direction of the economy, and commentary in the media and on social media from now until the convention next summer. But Democrats should realize that voters from the center-left to the center-right want an alternative to Trump’s trade policies. They want to see the damage repaired.

Trump’s decision to withdraw the United States from the Trans-Pacific Partnership—which lives on as the Comprehensive Progressive Trans-Pacific Partnership for the benefit of producers and consumers in 11 countries not called the United States—will make it that much more difficult to reverse the damage and rebuild commercial relationships when enlightened U.S. leadership recommits to that course. What they will find is that while the Trump administration (and, it now seems reasonable to conclude, the Republican Party more broadly) was indulging its protectionist nationalist grievances and playing hard to get (something Elizabeth Warren’s trade plan would double-down on by making prospective partners jump through all sorts of hoops), the EU, Canada, Mexico, China, Japan, Korea, and many countries in Latin America and Africa were pursuing and completing trade agreements, which have put and will continue to keep U.S. exporters at a huge disadvantage in many important markets across the globe.

Moreover, the World Trade Organization, which—along with its predecessor, the General Agreement on Tariffs and Trade—has provided some semblance of institutional continuity and the rule of law in international trade for over 70 years, is under severe duress and could collapse, in large measure because of U.S. actions and inactions. The Trump administration’s defiance of the trade rules and preference for vigilantism is pushing the global economy toward breaking up into competing spheres of influence. That outcome would reduce the scope for economies of scale, impede the process of specialization, and tempt more and more governments into imposing discriminatory tariffs on products from countries in the “other” sphere or spheres.

The administration’s aggressive and unpredictable behavior has worked to undermine U.S. credibility abroad, which means not only that American commercial interests will suffer, but that U.S. geopolitical objectives going forward will become more difficult and more expensive to achieve. Team Trump has created some real problems that the next administration must fix. What solutions do the Democratic candidates offer?

The Republican Party and its congressional leadership have fallen in line behind Trump’s America-First protectionist nationalism, abandoning the center and center right, leaving the business community, moderate Republicans, and “Never Trumpers” desperate for alternatives. These developments gives Democrats an opening to distance themselves from protectionism and set their sights on reclaiming the vast middle ground on trade—from the center-left to the center right—that it ceded to the GOP in the mid-1990s. It can do that by offering a pro-trade alternative that voters see as reasonable and realistic, and focuses on repairing bilateral relationships, securing agreements that put U.S. entities back on equal footing, contributing constructively to repairing the WTO, and insisting on enforcement through the rules-based system of trade.

If any candidate is looking to history for inspiration, it was in 1934 that a Democratic Congress and a Democratic president rescued the ship of U.S. trade policy, after it had been stranded on rocky shores by Republican tariffs, by passing the Reciprocal Trade Agreements Act.

The RTAA offered a way to begin digging the country (and the world) out of the protectionist hole that was dug by the Tariff Act of 1930 (aka, Smoot-Hawley) and its repercussions. The RTAA made it easier to negotiate, conclude, and enact bilateral trade agreements. The successes set the table for 23 countries to sign the original GATT in 1947, which was broadened and deepened incrementally over eight rounds of multilateral negotiations, culminating in the establishment of the WTO in 1995. This was the work of a bipartisan consensus in Washington that was initiated and nourished by Democrats, who understood the value of trade to economic growth and its centrality to fostering good relations among nations. Renewing that commitment in 2019 would be good for the party, the country, and the world.

Democrats—especially Sens. Warren and Sanders and others who call themselves “progressive”—should know that in the very same breath that they express opposition to trade agreements and preferences for tariffs, they endorse regressive taxation of life’s basic necessities: food, clothing, and shelter. Tariffs are not only taxes, but regressive taxes. There is an inverse relationship between income and percentage of income spent on goods. People with lower incomes spend higher percentages of their incomes on goods and lower percentages on services than do people with higher incomes. Imports account for the majority of the goods Americans consume. Furthermore, relatively high U.S. tariffs on products like clothing and footwear punish producers in poor countries disproportionately.

Maybe some sensible ideas will come to the fore during the debates over the next two nights, but as of now it seems that the Democratic candidates will remain hopelessly beholden to organized labor, environmental extremists, and anti-business, anti-capitalism, anti-globalization groups—even though the preponderance of Democratic voters favor trade, trade agreements, globalization, and U.S. global economic leadership. Likewise, there are millions of “Never Trumpers,” and centrist Republicans who became politically homeless when Trump commandeered the GOP and drove it to the nationalist, protectionist right.

The Democratic Party is long overdue for a serious, substantive debate over the objectives and tools of trade policy. Making a play for the center on trade would be the outcome that best serves the party and the country. Perhaps we’ll see evidence that debate has begun tonight.

Some Democratic presidential candidates want to introduce government-funded, universal childcare programs.

The stated rationale is usually the need for targeted financial help for families with children. But this reasoning is usually buttressed by a faith that government-funded care or preschool would improve the life chances of the children using it.

Such assertions are based on extrapolating research findings from more limited programs targeted at those on low incomes, such as Head Start, the Perry Preschool Project and the Carolina Abecedarian Project. But assuming these results apply to more universal programs is fraught with danger. Wise heads, such as Nobel Prize winning economist James Heckman, have previously warned that:

A much more careful analysis of the effects of scaling up the model programs to the target population, and its effects on costs, has to be undertaken before these estimates [of their impact] can be considered definitive.

A new paper on the effects of the universal childcare program in Quebec (by economists Michael Baker, Jonathan Gruber, and Kevin Milligan) shows why Heckman was right to be cautious. The results are devastating for the case for universal care.

On a sweep of evidence of universal programs around the world, the paper concludes that “there is a little clear evidence that these programs provide significant benefits more broadly,” than for some disadvantaged children.

The results in Quebec were even worse. The government there introduced heavy subsidies for care for all children from ages zero through four in the 1990s, alongside regulations designed to improve “quality.” Maternal labor supply unsurprisingly rose, and child care services were used more heavily than in the rest of Canada.

Disturbingly, though, “there was a large, significant, negative shock to the preschool, noncognitive development and health of children exposed to the new program, with little measured impact on cognitive skills.” This included “increases in early childhood anxiety and aggression.”

Proponents of universal care usually say, to paraphrase, that “a good start in life is crucial to future wellbeing.” It stands to reason then that interventions that harm children can likewise have enduring scarring effects. When it comes to Quebec, this is exactly what the economists found.

Though their results find “no consistent evidence of a lasting impact of the Quebec program on cognitive test scores,” the rest of their findings are extremely worrying:

We do, however, find a significant decline in self-reported health and in life satisfaction among teens. Most strikingly, we find a sharp and contemporaneous increase in criminal behavior among the cohorts exposed to the Quebec program, relative to their peers in other provinces. We illustrate graphically a monotonic increase in crime rates among cohorts with their exposure to the child care program, and we show in regression analysis that exposure led to a significant rise in overall crime rates. We also report that these effects are primarily for boys, who also see the largest deterioration in noncognitive skills [the later includes aggression and hyperactivity].

The economists charitably conclude that their results confirm that early life interventions can have sustained impacts on life chances (implying the importance of doing childcare policy “right”).

A more pessimistic reader would foresee potentially disastrous social consequences from adopting the sorts of universal programs that Democratic candidates are pushing.

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More on childcare, and a better way of helping families, here and here.

In Federalist 47, James Madison wrote that “the accumulation of all powers, legislative, executive, and judiciary, in the same hands, whether of one, a few, or many, and whether hereditary, self-appointed, or elective, may justly be pronounced the very definition of tyranny.” Our constitutional structure is thus built on a foundation of the separation of powers. Indeed, as any Schoolhouse Rock aficionado could tell you, the legislative branch is supposed to legislate, the executive branch is supposed to enforce that legislation, and the judicial branch should interpret that legislation. But what happens when Congress places all of those powers in one agency, and then removes all of that agency’s accountability to elected officials? Worse, what happens when the power of such an agency is in the hands of one unelected individual? This is what Congress did when it created the Consumer Financial Protection Bureau in 2010. First, Congress created a single director as the head of the organization, but insulated that director from presidential removal except “for cause.” This unique structure removes the president’s ability to exert control over the CFPB even though the agency is charged with enforcing laws. Furthermore, since a director serves a five-year term, a president could conceivably never appoint a new director. Second, Congress eliminated its own power over the CFPB by granting the bureau independent access to Federal Reserve funds. Because the CFPB doesn’t need congressional approval to access these funds, there is no “power of the purse” for Congress to use to control an agency empowered to regulate the financial services industry. Third, Congress then gave the CFPB almost unlimited power through vague statutory language. The Dodd-Frank Act grants the agency power to punish “unfair”, “deceptive,” and “abusive” practices, but also grants the CFPB’s director full discretion to define those terms. What’s even worse, no director has yet to define them terms, preferring to act on a case-by-case basis. With this vast arbitrary power, the CFPB has investigated, prosecuted, and punished people, a glaring violation of due process. This is why Cato has filed an amicus brief urging the Supreme Court to rule on the constitutionality of the CFPB, as we have before (we also previously filed twice in the lower courts arguing that it’s not). The high court has an obligation to defend our separation of powers. If the Court allows the CFPB to continue as currently constituted, it will allow major violations of constitutionally protected liberty by a powerful and unaccountable federal agency. The case is Seila Law LLC v. CFPB. The Court will decide whether to take it up when it returns in September from summer recess.

The U.S. federal government recently ordered the death penalty to be reinstated for the first time in sixteen years and has scheduled the execution of five death row inmates. This policy change goes against the widespread trend toward fewer executions.

Twenty-one U.S. states, plus the District of Columbia, have totally abolished the death penalty for all crimes. Seven of those states abolished the practice in my lifetime. New Hampshire just officially abolished it in 2019.

In many U.S. states where executions are still legal, none have been carried out for years and the law is mainly symbolic. Kansas, for example, has not executed any prisoners in over forty years. The U.S. federal government, similarly, never officially abolished the death penalty but has had a moratorium on the practice since 2004 – a moratorium ended by the new policy ordered by Attorney General William Barr.

Harvard University’s Steven Pinker has chronicled the decline of capital punishment in his book, The Better Angels of Our Nature. He estimated that the execution rate in the United States has been falling for four centuries, from nearly 3.5 executions per 100,000 people in the 17th century. His graph is pictured below.

Trends against capital punishment can also be observed abroad as well. Consider Europe. Prior to the Enlightenment, European nations once used the death penalty for a vast number of crimes. England, for example, had 222 capital offenses in its legal system well into the 18th century. Until the early 19th century, it deemed many minor crimes, such as stealing anything worth more than four dollars in today’s currency, to be worthy of execution. As the values of the Enlightenment spread, that number of capital offenses shrunk to four by the middle of the 19th century. Today, in Europe, capital punishment remains legal only in Belarus and Russia. 

The change extends beyond Europe. This year, Malaysia abolished mandatory capital punishment. Last year, Burkina Faso abolished the death penalty in its new penal code. Moreover, Gambia and Malaysia declared an official moratorium on executions. Last year, Amnesty International noted, at least 690 executions took place in 20 countries. That number was 31 percent lower than in 2017. The vast majority of recorded executions happen in Iran, Saudi Arabia, Vietnam and Iraq. 

Then there are China and North Korea. The two communist countries execute more people than other countries and may well execute more people individually than the rest of the world combined. Unfortunately, there are no reliable statistics for those secretive societies. 

The move to reinstate capital punishment federally in the United States represents a reversal after more than a decade-long hiatus in the federal use of capital punishment. But opponents of the practice can take heart in the successful abolition of the death penalty in an increasing number of U.S. states and countries around the world.

The massive demonstrations in Hong Kong against the proposed extradition bill revealed the moral rectitude of citizens to protect their way of life and freedom from Communist China. On June 9, hundreds of thousands of individuals exercised their right to peacefully contest the extradition legislation supported by Chief Executive Carrie Lam. By putting moral and political pressure on government officials, the people succeeded in reversing the course of the bill, which was suspended on June 15 and declared “dead” on July 9. Yet the bill has not been fully withdrawn and could be reintroduced in the future—and the protests continue.

Photo Credit: The Asian Age 

Protesters are concerned that, if a bill allowing extradition to the Mainland were enacted, Hong Kong would risk losing its unique status as a guardian of the rule of law, limited government, economic freedom, and human rights. The possibility of being convicted of a crime against the Mainland, extradited, and subjected to China’s draconian penal system would increase uncertainty and result in self-censorship— undermining the free market in ideas that is Hong Kong’s trademark. The resulting outflow of human and financial capital would have dire consequences for both Hong Kong and China.

 It was to protect their way of life that the protesters marched and stopped the pulse of everyday life in the world’s freest economy. But on June 12, the protests turned violent as a small minority broke into the Legislative Council’s building, clashed with police, and called for immediate withdrawal of the bill and the ouster of the chief executive. More recently, protesters have defaced the Chinese national emblem and thugs have beaten pro-democracy demonstrators. 

One protester, 29-year-old Sandy Chan, expressed the sentiment behind the protest movement by saying, “protesting is the only way we can make our voices heard in the absence of democracy.” It would have been more correct to say “one of the few ways” because, unlike the People’s Republic of China (PRC), Hong Kong has a genuine rule of law that respects basic human rights. Article 27 of the Basic Law, which was promulgated in 1997, states: “Hong Kong residents shall have freedom of speech, of the press and of publication; freedom of association, of assembly, of procession and of demonstration.” 

 Other protected rights include:

• “The freedom of the person of Hong Kong residents shall be inviolable” (Article 28).
• “The homes and other premises of Hong Kong residents shall be inviolable” (Article 29).
• “Hong Kong residents shall have freedom of conscience” and “freedom of religious belief” (Article 32).

Those freedoms are not granted by the state; they pre-exist government and are the natural rights of all citizens. The grounding of rights in individuals, not the state, contrasts sharply with the top-down approach to rights in China, where basic rights stated in the PRC Constitution are merely “paper rights” and the rule of law is a rule designed to “build socialism”—not a meta-legal principle to defend life, liberty, and property.[i] That is why ethnic Chinese in Hong Kong mostly see themselves as “Hong Kongers,” with only 11 percent identifying themselves as “Chinese”—that is, as national citizens of the PRC (see Cheung and Hughes, BBC News, 2019: 4).

Yet, the “one country, two systems” doctrine embedded in the Basic Law will end in 2047, only an instant in China’s long history. What happens in the next 28 years will define the future of Hong Kong. If Hong Kong can export its system of limited government and individual freedom to the Mainland—by showing that a free market in ideas is far superior to “socialism with Chinese characteristics”—then there is hope that China may eventually move from a model based on “building socialism” to one that recognizes the principle of spontaneous order[ii] under what F. A. Hayek called a “constitution of liberty.”

Unlike the Mainland, everyone in Hong Kong has a voice in a free market for ideas and an opportunity to criticize the state, including Beijing. The evils of the 1989 Tiananmen crackdown have not been forgotten as Hong Kongers gather each year to commemorate all those who lost their lives fighting for freedom and democracy.

To maintain their own freedom and move toward democracy, the Hong Kong people need to leverage the free market in ideas. The moral force of the voices of freedom and limited government should not be underestimated. Just as free trade in goods and services increases the wealth of a nation so does free trade in ideas. 

Social media has been widely used to “spontaneously” organize the protests. But when young demonstrators like Sandy Chan think that taking to the streets is the “only way” to make their voices heard, they risk taking a tactical approach to reform that could backfire as protests become violent or disruptive.

What is needed is a long-run strategy that relies on the strength of Hong Kong’s ethos of liberty and adherence to limited government, which is even more important than democratic rule. As Hayek has noted, “The benefits of freedom are … not confined to the free”—“unfree societies benefit from what they obtain and learn from free societies” (The Constitution of Liberty, 1960: 32). China has certainly benefited from allowing Hong Kong to maintain its free-market trading system since 1997, and that system could not have survived without a corresponding free market in ideas.

In December 2003, Premier Wen Jiabo expressed optimism regarding China’s future and argued that, in “building socialism with Chinese characteristics,” Beijing needs to “respect and protect the freedom of the Chinese people to pursue happiness.” The means to attain that end, however, are better supplied by Hong Kong’s open society than by China’s repressive system.

Sandy Chan and other protesters need to recognize that Hong Kong’s institutional infrastructure, characterized by limited government and a genuine rule of law, gives them great moral leverage over Beijing. If the youth in Hong Kong are to win the war of ideas, they need to have a firm grasp of the uniqueness and power of the ideas underlying Hong Kong’s success—namely, that individual rights to life, liberty, and property are sacred, and that the only legitimate role of government is to protect those rights. 

The protests against the extradition bill have succeeded in killing the legislation for now, and Hong Kong leaders who favored the bill have lost face—but not their official status. Without competitive, free elections, Hong Kongers are handicapped but not totally ineffective in shaping the political landscape and confronting Beijing with the stark reality of two systems: one in which there is still a free market in ideas and the other in which a “president for life” is intent on suppressing all criticism.

One of China’s best-known reformers, Professor Wu Jinglian, has argued that “only by matching the rule of law with the market economy can we achieve total success.” But while the Chinese Communist Party (CCP) has pledged to “further emancipate the mind” and President Xi, in his October 2017 report at the CCP’s 19th National Congress, advocated following “the principle of letting a hundred flowers bloom and a hundred schools of thought contend,” those promises remain empty in a system where dissent is outlawed by a powerful one-party state (see Dorn, 2019: 173–74). 

To win the war of ideas, Hong Kong needs to remain an open society and fight the Mainland—and those who sympathize with Beijing—with ideas. Key to that battle is the idea that limited government and a free market in ideas are better means to enable individuals to pursue happiness than state control.

As no less a public figure than Sen. Bernie Sanders (I‑Vt.) has ironically been discovering lately, it’s not easy for an employer to comply with wage and hour law these days. For another illustration as to why that is, consider last month’s unanimous Supreme Court ruling reversing the Ninth Circuit in Parker Drilling v. Newton. 

Although it was closely followed by business groups, Parker Drilling drew relatively little attention in the wider press. The practical question it raised might at first seem irrelevant to most ordinary workplace settings, namely: are oil workers on platforms off the California coast owed overtime pay for time they spend sleeping and otherwise off duty while on site? 

Up till 2015, the answer to that question seemed clear: federal law sets labor standards for offshore platform workers, and it says sleep and recreation periods don’t have to be paid. (Such arrangements have long been routine at the platforms, given that for many workers commuting to housing on land is not very practical.) In 2015, however, the California Supreme Court interpreted its state law in a different and more liberal way, classifying more on-site sleep and recreation arrangements as generating legally compensable time. Class action lawyers sprang into action, arguing that this new state rule should be applied to platform workers off the Pacific coast. While a district court dismissed the claim, the Ninth Circuit vacated and remanded, holding that the federal labor rules incorporated the new California rules by implication. 

Pause for a moment to note a curious thing about this controversy: at least for the sorts of high-skill jobs found on offshore oil platforms, predictable labor market adjustments could mean that a legal rule on whether to count sleep time might not make much difference in practice. As the Washington Legal Foundation noted in its merits brief before the high court, “Until California announced its rules four years ago in Mendiola v. CPS Security Solutions, Inc., employers and employees negotiated OCS [Outer Continental Shelf] wage agreements with the understanding that sleep and rest time spent on OCS structures was not compensable under applicable federal law.” Flip that presumption, and with base wage lowered appropriately (still higher than minimum wage) and overtime added back, the negotiation could wind up reaching much the same overall pay package.

What proved distinctively destructive, here as in many situations, was legal uncertainty. As often happens when law changes by judicial say-so, the new California rule was said to apply retroactively: the platforms should have been paying for downtime all along. So the platform employers were handed an enormous past bill for compensation that, had they known ahead of time, they might have negotiated their way around. 

Now that won’t happen: after its own dive into the waters of statutory language and federal pre-emption theory, the Justices unanimously agreed that federal law does not incorporate California’s for this purpose, putting yet another distinctive Ninth Circuit frolic to an end. But the drilling episode typifies many other situations in which wage-hour law, especially as it comes under pressure to change and liberalize, generates uncertainty. Should exemptions be read narrowly so as to bring more white-collar and academic workers under overtime law? Is time spent donning and doffing work apparel compensable? What about the situations of tipped restaurant workers, service advisers at car dealerships, church volunteers, gig economy drivers, and workers who check e‑mail after work hours? 

Even if you’re a class action lawyer, it’s hard to see all these uncertainties as optimal. 

Before the distraction of Robert Mueller’s congressional testimony and its inconsequence, the nation had been roiling over President Trump’s tweet that four progressive, minority congresswomen should “go back” to the countries “they originally came from.” The president’s critics condemned the tweet as racist and xenophobic. He and his supporters responded that it was a justified demand that Reps. Alexandria Ocasio-Cortez (D, NY), Ilhan Omar (D, MN), Ayanna Pressley (D, MA), and Rashida Tlaib (D, MI) stop criticizing the nation and its government’s policies.

This post focuses on a different problem with the tweet, one that has gotten overlooked: it was a direct attack on representative government and the U.S. Constitution. And the attack has been repeated in Trump and his supporters’ subsequent comments.

In their 2018 election campaigns, Ocasio-Cortez, Omar, Pressley, and Tlaib were explicit about what messages and ideas they would take to Washington. Agree with them or not, the legislators are now in Congress doing what their constituents elected them to do. Because the four are following their voters’ will, Trump and his supporters say the congresswomen should leave the Capitol and/​or the country.

Trump and his supporters may consider this a patriotic defense of the United States. But the demand to “Send them back!”—even if just campaign rhetoric—strikes at the nation’s founding principles. It is as much a violation of America’s ideals as celebrating the country’s independence with a display of military might rather than a tribute to individual liberty and democratic representative government.