Tuesday, October 1, 2019

Our Strength And Our Prosperity Depend On Our Diversity: Reality Or Ideology?

Economic growth is driven by increases in productivity and labor.  However, not all labor is the same.  Some is low-skilled, low-valued-added, while other labor is high-skilled, high-value-added.  It makes a big difference in the rate of growth if the increase in labor is low-skilled or high-skilled.

The data below show the changing racial and ethnic demographics of the United States by decade, 1940-2020, in percent.  The far-right column shows the annual average rate of economic growth for each decade beginning with the year in the first column.

Racial and Ethnic Demographics of the United States, 1940-2060
By Decade

Two numbers immediately pop out.  One is the increase in the share of Hispanics (Mexicans, Central Americans, South Americans, and some Caribbean islanders)  The other is the decade average declining rate of growth.  Correlation is not causation.  But the data make it hard to argue that large numbers of Hispanic immigrants, whether legal or illegal, increase the rate of growth.

Could we argue the counterfactual, that the rate of growth would be lower still without large-scale Hispanic immigration?  No.  Studies show that first generation Hispanic immigrants in America are disproportionately low-skilled.

It’s hard to go a day without hearing an economist say that the United States needs both kinds of immigrants.  High-skilled immigrants help drive innovation, while low-skilled immigrants do the jobs Americans don’t want to do.  But wanting low-skilled immigrants is not the same thing as needing them.  Let middle-income and upper-income households mow their own lawns and do their own household chores.  Let agriculture invest in automation and mechanization instead of relying on low-cost, backbreaking immigrant labor.  (E.g., Australia).  Let industry continue to invest in automation.  Let the middle class pay a bit more to eat out, or stay in a hotel, or pay more for other services that use low-cost labor.  Importing low-cost labor for the economic comfort of middle- and upper-income households does not have any moral basis, while it simultaneously increases the income gap between the top 10% and the bottom third of the income scale, which has become an issue of national concern.

The implication for immigration policy is clear.  Our strength and our prosperity benefit from high-skilled immigrants.  We should also increase the skills of resident Americans!

Politics and economics often conflict.  The Democrat Party wants more low-skilled immigrants, who vote Democrat when they become citizens.  Try a thought experiment.  If the vast majority of Hispanic immigrants voted Republican, would the clamor for low-skilled immigrants continue or decline?  Be honest.

Thursday, September 26, 2019

Why It’s So Hard To Withdraw U.S. Troops From Afghanistan, The Middle East, And Other Regions

First, some facts, based on U.S. Department of Defense statistics as of June 30, 2019.  The data are by region, identifying the most important countries.

Europe:  (NATO):  64,702
            Germany:  35,232  (20 U.S. military bases in Germany)
            Italy:  12,843

East Asia (Excluding Hawaii and Guam):  84,593
            Japan:   55,327
            South Korea:  26,086

West Asia, Central Asia, South Asia, Africa, and Indian Ocean:  10,683
            Bahrain:  4,371

Unspecified:  9,076
Afghanistan (Q4 2017):  11,100

Iraq (Q1 2012):  11,445

U.S. troops have been in post-war Europe for 74 years, providing stability and preventing Soviet (Russian) expansion into Western Europe.  U.S. troops have been in Japan for 74 years and in South Korea for 59 years, protecting Japan from Russian encroachment and helping to secure stability and prosperity in South Korea.  Since 2001, U.S. troops have fought wars in Afghanistan, Iraq, Syria, and Libya, and are stationed in bases in Bahrain and Qatar.

The annual cost of maintaining U.S. troops in Europe, Japan, and South Korea is relatively modest compared with the past two decades of “hot” wars in Afghanistan and the Middle East.

An official estimate of the cost of the war in Afghanistan between 2001-19 is $975 billion in overseas contingency operations dedicated specifically to the war.  During 2001-14, Operation Iraqi Freedom cost $815 billion.  In addition, the base budget for the Department of Defense increased about $250 billion and the Veterans Affairs budget increased by more than $50 billion since 2001.

A Brown University study estimated the direct cost of the wars in Iraq, Afghanistan, Pakistan, and Syria between 2001 and 2016 at about $3.6 trillion.  Adding in money appropriated for war spending and on homeland security for 2017-19, the total surpasses $5 trillion (includes future obligations of $1 trillion through 2053 for veterans medical and disability costs, as well as interest on borrowing for wars).

Should the United States continue to deploy over 100,000 troops and spend hundreds of billions of dollars to stabilize Europe and East Asia?  A case can be made that the U.S. has benefitted from a stable global economic order.  A case can also be made that fewer troops in Germany, Japan, and South Korea could also do the job.

In contrast, the Middle East and Afghanistan lack the stability of Europe, Japan, and South Korea.  Without a major U.S. presence, the Taliban might be able to take over Afghanistan, an aggressive Iran could threaten Iraq and other Arab countries, and ISIS could resurface.

But it can also be asked if thousands of casualties and the expenditure of trillions of dollars since 2001 have brought security, stability, democracy, and prosperity to these countries.  Those who served in political, diplomatic, or military office in the Bush and Obama years are generally opposed to even minor withdrawals of U.S. troops.  Apart from President Trump, antiwar activists, and  those who believe the money should be spent on domestic programs, there are few influential interests advocating a significant withdrawal of U.S. troops from the Middle East and Afghanistan.  They are no match for the Diplomatic, Military, Industrial, Political Complex.

The Diplomatic, Military, Industrial, Political Complex

Before naming names, let’s start with an overview.  The Project on Government Oversight has documented that as many as 380 high-ranking Defense Department Officials and officers over the past decade have left government to become lobbyists, corporate board members, and defense contractor consultants.  The list includes 25 four-star generals, 9 admirals, 43 three-star lieutenant generals and 23 vice admirals.  A quarter went to work for the top five defense contractors (Boeing, General Dynamics, United Technologies, Lockheed Martin, Northrop Grumman).

Former Defense Department officials and officers are only a part of the DMIPC.  Prominent consulting groups generally support continued involvement in the Middle East and Afghanistan.  

Let’s take a look.  (Rather than list all the important names affiliated with each group, I think you would benefit from the research exercise of looking up each group, examining the scope of their global operations and personnel, and letting the information sink in.  I’m not being lazy.)

Albright Stonebridge Group.  ASG was founded by former Secretary of State Madeline Albright and merged with Stonebridge international.  Its heavy hitters include the former U.S. Commerce Secretary, former foreign ministers from Spain, Germany, and Portugal, and a former Swedish Minister of Finance.

Kissinger Associates, Inc.  It’s a Who’s Who of the powerful and influential.

The Cohen Group.  TCG was founded by former U.S. Secretary of Defense William S. Cohen.  Its staff and counselors come from the White House, the departments of State, Defense, and Commerce, and Congress.

Rice Hadley Gates.  RHG was founded by former U.S. Secretary of State Condoleezza Rice, former Secretary of Defense Robert Gates, and former Assistant to the President for National Security Stephen Hadley.

The Clinton Foundation.

Members of Congress generally support large defense appropriations and military bases in their districts to provide jobs and income for their constituents.

Several important think tanks concentrate on defense and foreign affairs.  The majority of their experts do not support withdrawing troops from Afghanistan and the Middle East.

Several of my military and diplomatic Hoover colleagues serve on the boards of directors of top defense contractors and are principals and counselors of global consulting groups.  Do not construe this post as criticism of their activities.  These individuals can bring their vast experience and expertise to bear upon important matters of foreign policy and national security.

My point is that they and their employers have little incentive to support reduced military expenditure and involvement in Afghanistan, the Middle East, Europe, East Asia, and other real and potential trouble spots.

It takes a major shock (e.g., Kent State) to reverse military policy.  Any major shock that occurs in the near future is likely to strengthen the argument for continued or even increased U.S. military involvement in geostrategically important regions. Iran, Russia, and China loom on the horizon.

Monday, September 9, 2019

Understanding Chinese President Xi Jinping’s Motivation And Ambition

Apart from a brief flirtation with democracy immediately after the fall of the Qing Dynasty in 1911 and the emergence of multi-party democracy in Taiwan in 1992, autocrats have ruled China throughout its history.

China has been governed by regional nobles, national emperors, warlords, and Communist Party leaders.  The current Communist leader is Xi Jinping, author of “Xi Jinping Thought on Socialism With Chinese Characteristics For The Modern Era,” a 14-point statement that has been incorporated into the Constitution.  President Xi has eliminated the traditional limit of two five-year terms for the Chinese Communist Party paramount leader.

China’s Communist leaders have worked hard to eliminate the stain of Western imperialism that began with the Opium War in 1839 and ended on the Chinese mainland with the founding of the Peoples Republic of China in 1949.  Mao Zedong’s successor, Deng Xiaoping, formulated the doctrine of “one country, two systems,” under which Hong Kong and Macao were promised a high degree of autonomy to maintain unchanged their capitalist way of life for 50 years.  Recovering Hong Kong (1997) and Macao (1999) eliminated the remaining enclaves under Western control on the Chinese mainland.  Absorbing the Republic of China on Taiwan into the mainland is the remaining objective to complete the unification of China.

The philosophy and practice of Communist Party governance has not taken the form of a straight upward trajectory.  There have been bumps along the road.  Think in terms of “two steps forward one step backward,” “one step forward one step pause,” and other combinations of advancement, retrenchment, and holding patterns.  President Xi’s current dance with President Trump over a trade agreement may appear that Xi is making concessions to Trump to avoid risking a slowdown in China’s growth.  That would be wrong.  Any concessions Xi makes should be seen as a temporary measure along the way to fulfilling his (and China’s) domestic and foreign policy goals.

What is Xi’s ambition?  First is securing China’s dominance in economic, political, and military power throughout East Asia, pushing the West, specifically the United States, away from  China’s sphere of influence.  Second is expanding China’s influence throughout Southeast Asia, South Asia, and Central Asia, concurrent with a gradual reduction of America’s military presence in Afghanistan, Central Asia, and the Middle East.  Third is increasing Chinese influence in Europe (“one belt one road”) and enhancing China’s influence in Africa, the Caribbean, and Latin America.  President Xi can deploy the wealth generated from decades of high growth in pursuit of China’s regional and global ambitions.

Does President Xi really understand American politics?   Or is he getting mistaken advice that America can be pushed out of Asia and lacks the will to complete with China for global influence?  Perhaps Xi was poorly advised about President Trump in his early encounters with him.  Perhaps Xi believes that Trump desperately wants a trade deal to win reelection in 2020 and that Trump will make concessions.  Perhaps he believes U.S. polls showing Trump trailing several Democrat candidates and that he can wait until 2021 when a Democrat takes over the conduct of U.S. foreign policy.  Even if Xi signs what seems to be a one-sided deal in America’s favor, do not expect China to adhere to the spirit and letter of an agreement.  If you want evidence, Hong Kong people were promised that they could elect their Chief Executive by universal suffrage.  So much for that promise!

Xi is well on the way to attaining Chinese dominance in East Asia.  The U.S. cannot deploy all its military and economic resources to contain China as America also confronts problems in Europe, the Middle East, the Arctic, and Africa.  The U.S. has also entered a period of increasing racial/ethnic and other political divisions which will occupy political attention at home.  China can bide its time till it takes the net big step forward.

It would be a mistake to listen to the American doomsayers of China’s diminishing economic prospects.  They have been wrong for 40 years.

Thursday, September 5, 2019

A Proposal To Reduce Mass Shootings In America

Mass shootings are tragic.  Each incident receives massive media coverage and prompts federal, state, and local lawmakers to propose new laws and regulations to restrict gun ownership and strengthen enforcement of existing gun laws to reduce the incidence of mass shootings.  Still, mass shootings persist.

There is no consensus on the definition of a mass shooting.  Mass Shooting Tracker defines a mass shooting as four or more persons shot, wounded and/or killed, in a single shooting spree.  Another defines a mass shooting as multiple victims of firearm-related violence.  The FBI defines mass murder as four or more persons killed in a single shooting episode. The number of persons killed and wounded in mass shootings depends on the choice of definitions. 

Wikipedia counted 12 mass shootings from January through August 2019, in which 78 were killed and 120 wounded.

Mass Shooting Tracker, a crowd-sourced database, counted 507 killed and 1114 wounded through August.  MST has been criticized as an overly loose standard.

Yet another definition counted 21 mass shootings through July, causing 129 deaths and more than 64 wounded.

To put these numbers in perspective, mass shootings accounted for less than two-tenths of 1% (0.2%) of all homicides in the United states between 2000 and 2016.  Between January and August 2009, 15 U.S. service members were killed in Afghanistan.

A good way to grasp the extent of mass shootings and killings is to compare them with Chicago.  Detailed shooting and killing statistics can be found at heyjackass.com.  From January through August 2019, 320 were shot and killed and 1575 were shot and wounded.  Labor Day weekend totaled 9 dead and 35 wounded.  So far this year, a person has been shot in Chicago every 3 hours 6 minutes and one murdered every 16 hours 54 minutes.  Police shootings are responsible for only 5 killed and 3 wounded.

The site includes a map showing the locations of dead and wounded and lists the numbers in the 15 deadliest neighborhoods.

The race of those killed is 291 Black, 41 Hispanic, 13 White, and 3 Unknown.  The cause of death is 319 gunshots, 19 stabbing, 4 strangulation, 2 trauma, 2 child abuse, 1 auto, and 1 maternal assault.  The shot ratio of male to female is 5.97 to 1.

There have been 28 incidents of multi-victim shootings of four, killing 14.  There have been 256 incidents of 2 and 3 victims shot in a single event, killing 91.  The site presents annual homicides between 1957-2018.  Especially deadly years were 1974 (970 killed), 1992 (943), and 2016 (808).

Chicago is only one example of shooting deaths and injured in the United States.  It illustrates the extent of urban shootings relative to mass shootings, yet urban shootings receive much less national attention.  Reducing firearm-related violence in Chicago could serve as an example for the rest of the country.

A Proposal To Reduce Firearm-Related Violence In Chicago

I propose the establishment of an inter-university task force consisting of distinguished faculty from the top 10-15 national universities, co-chaired by the universities of Chicago and Northwestern.  The task force should include experts from sociology, political science, economics, education, criminology, law, medicine, family relations, and other pertinent fields.

The task force should construct a multi-year research design, say, 3-5 years, in which it proposes a number of interventions designed to try to reduce firearm-related violence in Chicago, evaluate which measures work and which do not, and write a report that points the way forward in reducing firearm-related violence.

The report can become a foundation on which municipal, state, and federal policies can be considered and implemented on a nationwide basis.

There is merit in universities providing expertise to poor and lower-middle-income countries.  But a focused effort in the United States might save thousands of lives and greatly improve education, safety, and economic opportunity in high-crime zones.

Tuesday, September 3, 2019

Why Aren’t The Presidents Of America’s Leading Universities Publicly Supporting The Quest of Hong Kong Students For Democracy And Freedom?

Almost every leading university in America has a center for the study of democracy and encourages its students to help build democracy around the world.

But why haven’t the leaders of these same universities signed and published a letter supporting the students in their quest for freedom and democracy against repressive rule from China?

Perhaps they fear losing their mess of Chinese pottage.  The most recent data I could find (2017-18 academic year) reported 363,341 mainland Chinese students attending U.S. tertiary institutions, a nearly fivefold increase from 62,523 in the 2004-05 academic year.  Mainland Chinese make up about a third of all international students in U.S. tertiary institutions.

The 363,341 students paid an estimated $12 billion in tuition and fees to U.S. colleges and universities, an average of $33,000 per student.

About 36% of mainland Chinese students are enrolled in Bachelor’s programs, 32% in Master’s programs, 15% in doctoral programs, and 17% in community colleges.  Elite private universities collect well above the $33,000 average.

About a tenth of all mainland Chinese students enroll in just ten schools:  Michigan State, Ohio State, Illinois, Purdue, Michigan, Southern California, UCLA, Columbia, Berkeley, and NYU.  Most have large STEM programs.  They would face financial strain if Chinese enrollment dried up.

Given the increasing political, social, and economic importance of China, many leading American universities also have affiliations with Chinese universities that they want to maintain.

China could use its tuition paying students and its hosting of branches of U.S. universities as pawns in any major dispute with the United States.  The presidents of U.S. universities are not likely to risk billions of dollars and ties to China in support of student protests in Hong Kong that have little chance of overcoming Chinese opposition.