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More Drug-War Failures in Latin America

The Skeptics

Two news stories over the past week underscore both the futility and the damaging side effects of the supply-side component of the war on drugs in Latin America. The degree of futility can be gauged from a lengthy article in the Wall Street Journal about the rebound of cocaine production in Peru. Just a few years ago, U.S. officials were hailing Peru as a great success story, noting that cocaine production there had been declining steadily since the early 1990s. What they conveniently forgot to mention is that during that same period, production in Colombia was soaring—more than doubling by 2001.

As my Cato Institute colleague Juan Carlos Hidalgo points out, drug warriors typically ignore data that doesn’t fit their overall narrative that progress is being made in the campaign against the scourge of illegal drugs. White House drug czar Gil Kerlikowske, for example, likes to emphasize that cocaine production in Colombia dropped some 61 percent between 2001 and 2009. But that decline merely reversed a portion of the surge that had taken place during the previous decade. The reality is that cocaine production coming out of Colombia is still more than twice what it was in 1990. That’s hardly a success story.

Moreover, as production in Colombia has sagged, it has been on the increase again not only in Peru but also in Bolivia. Utilizing data from the United Nations Office on Drugs and Crime, Hidalgo shows clearly that overall cocaine production in the Andean region of South America is higher today than it was two decades ago. The only thing that has happened is an ebb and flow of output involving the various countries. When a crackdown (invariably in response to pressure from Washington) occurs in one producing country, that decline is offset by a boost in output from one or more of the other countries where the pressure is not as intense. This is the notorious “balloon” or “push down, pop up” effect that has plagued drug warriors for decades. Despite periodic claims of success, as long as robust consumer demand exists for drugs, an adequate supply will emerge. Only the specific geographic source of the supply will vary.

The supply-side campaign’s futility is bad enough, but even worse is the damage that Washington’s obsession with waging a war on drugs has done to other countries. In previous writings, I’ve noted the havoc that policy has caused in Mexico. Increasingly, it is also creating problems for Mexico’s more fragile neighbors in Central America. Now, evidence is emerging that there is an extensive presence by the Drug Enforcement Administration as well as more than six hundred U.S. troops in Honduras. Washington’s assistance to that country’s security forces, which have long had a dubious human-rights record, has already led to the deaths of civilians and an outpouring of anger from the Honduran people.

It has now been more than four decades since President Richard Nixon declared a “war” on illegal drugs. There have been few positive results to show for that enormous effort. On the other hand, the United States has expended vast financial resources, filled America’s prisons with nonviolent drug offenders, enriched and empowered the brutal Mexican drug cartels, and caused bloody societal dislocations in several hemispheric neighbors. That is a good operational definition of a policy fiasco.

TopicsCivil SocietyTradeSecurity RegionsCentral AmericaSouth AmericaColombiaMexicoPeru

Merkel to Europe: Drop Dead

Jacob Heilbrunn

Has Germany declared war on Europe? Or has Europe declared war on Germany? Speaking to members of the Free Democratic Party, her coalition partner, German chancellor Angela Merkel announced that euro bonds would never be created "as long as I live."

Merkel's remarks created a flurry of fresh consternation among her critics, both in Germany and abroad, as everyone tries to puzzle out whether she really means it or is just bluffing. In part, Merkel is trying to shore up her bona fides at home, especially with the Free Democrats, a classically liberal party that represents industry and views the idea of pooled debt—which is what a Eurobond would represent—with horror. The Free Democrats surely would rather see Greece and other countries depart the euro before the German taxpayer has to absorb the losses accumulated by its once-cherished euro partners down south.

The Social Democrats and the Greens, by contrast, are criticizing her refusal to contemplate euro bonds. They want to become financially bonded to Germany's European partners, or at least say they do, as long as they themselves are not in power. But as an electoral issue, it is a nonstarter. The Germans don't view pooling debt as a way to emancipate Europe. They view euro bonds as representing permanent euro bondage. Malte Lehming, the opinion editor of the Berlin daily Der Tagesspiegel, says, "Thank God we have Merkel. The Euro bonds and calls for more spending represent a failed Keynesianism. Things are going well for us economically. If we had spent hundreds of billions more, what would it have brought us? More debt." Lehming views France's latest stimulus with contempt: "Building more roads creates jobs in the short-term. But it does not create long-term economic activity."

The clash is clear. In Europe, the socialists want to follow the path of the Obama administration, which is to try old-fashioned stimulus. And if the stimulus does not stimulate, the response goes, then not enough stimulation took place in the first place. Merkel and British prime minister David Cameron see it differently. But Cameron really has no voice in debates over the euro. It is the doughty German chancellor who is holding out against the rest of Europe. To understand why Merkel feels so confident, you only need to look around Berlin, which is a vast construction site, a buzz of activity. There is no hint of an economic slowdown. Instead, a new Teutonic colossus is arising in the heart of Europe, one that is not dependent on its neighbors. They need Germany more than Germany needs them. Even the burden of the historical past, which largely dictated former chancellor Helmut Kohl's push for the euro, is ebbing away. A new Germany is emerging.

Whether European Union president Herman Van Rompuy will be able to overrule Merkel is questionable. The latest European summit was suppposed to be the one that solved this problem. But all along the incentive for Germany has been to play out this crisis as long as possible, which means that more lofty-sounding declarations will emanate from Brussels without curing any of the ills afflicting Europe. Whether those ailments can be quickly treated is increasingly dubious. Spain is announcing that even the private highways it built have turned out be be commerically unviable. Cyprus, headed by a communist, wants a bailout.

Small wonder that Merkel and the Germans wish in their heart of hearts that they would all go away. Germany is learning what it feels like to be America—powerful and resented. That is the price of success. But so far, it seems to be one that the Germans appear more than ready to pay. Germany has become the land of the 1 percent, and the rest of Europe is the 99 percent. They will have to get used to it. Germany already is.

Image: א (Aleph)

TopicsCurrency RegionsGermany

Informed Americans Favor Cutting Defense Spending

Paul Pillar

An innovative poll, conducted jointly by the Center for Public Integrity, Program for Public Consultation and the Stimson Center and discussed this week at the Council for Foreign Relations, provides a perspective on American public attitudes toward defense spending that would be hard to glean from anything heard in political campaigns, including the current one. Most traditional polls that simply ask out of the blue for a view on whether spending on the U.S. military should be increased, decreased or stay about the same get as the predominant response that it ought to stay about the same. The new poll investigated what Americans favor if confronted with relevant data as well as arguments on each side of the issue of defense spending.

The poll began by providing each respondent information about current U.S. spending in several different frameworks: in comparison with other discretionary programs, with entitlements, with previous years' defense budgets (both in constant dollars and as a percentage of GDP), and with defense spending of allies and potential adversaries—in other words, in just about every possible way in which the data could be framed. Respondents were asked after each framing whether defense spending was more, less or about the same as what they had expected. “More” responses significantly outnumbered overall the “less” responses. Next the respondents were presented with equal numbers of arguments that explained the main reasons people either oppose or favor cuts in U.S. defense spending. The arguments put the most reasonable face on each side of the issue. Respondents were asked after each argument whether it was convincing. Every argument—those against as well as those in favor of spending cuts—was convincing to a majority of those polled.

It was only after reading the data and the arguments, and being reminded of what the actual defense budget is for 2012, that the respondents were finally asked what they think should be spent on national defense for 2013. A large majority (76 percent) would cut the budget, with only 10 percent favoring an increase. The average of all the amounts proposed represented a cut from 2012 of $127 billion. Possibly a more meaningful figure—to reduce the effect of extreme outliers—was the minimum amount that a majority of respondents would cut: a majority favored a cut of at least $83 billion. Differences according to party affiliation were in the expected direction, but even a majority of Republicans favored cuts of at least $50 billion (Democrats would cut at least $106 billion).

Not to put too fine a point on it, but the comparison of these results with those of the simple out-of-the-blue questions about defense spending can be summarized this way: uninformed Americans may support maintaining current defense spending, but informed Americans favor substantial cuts.

So why have the politics of this issue shaped up the way they have, with one presidential candidate proposing large increases in defense spending and without hearing much from other leaders that sounds equivalent to the crash course in defense budgets that respondents received in the course of taking this poll? The short answer is that most Americans are ill-informed about such matters, it has never been politically advantageous to believe otherwise and it is unrealistic to think a political campaign can be made into a crash course on anything.

A more immediate factor concerns the threat of sequestration that emerged from the Congressional supercommittee's failure to reach a budget agreement. That threat, with the possibility of substantial defense cuts next year, appears to be about the only thing with any chance of inducing even a hint of flexibility about revenue raising among hitherto inflexible Congressional Republicans. The Obama administration and Secretary of Defense Panetta are thus not inclined for the time being to say anything that makes that threat sound less threatening.

More generally, the role that rhetoric about defense spending plays in an election campaign may often be less about defense spending itself than about how such rhetoric is a way to exude toughness and strength on national-security matters. That sort of image burnishing appears to be how Mitt Romney is using the defense-spending issue, especially given the arbitrary, pulled-out-of-a-hat quality that some of his numbers have. The tactic may work. Even some of the same people who when polled favored a level of defense spending far different from Romney's may still respond positively to his tough-guy posture on national security.

In brief, our defense spending is in large part determined by a political process that involves widespread public ignorance, a ham-fisted approach to budget cutting necessitated by one side's refusal to compromise and a he-man approach to debating national security. What a way to make policy. Perhaps once we get past the sequestration business we can have, if not a crash course, at least a national debate that is serious enough and deep enough for the public to make the sorts of choices the poll showed the public can make when it is sufficiently informed.

TopicsCongressDomestic PoliticsDefensePublic Opinion RegionsUnited States

Castro and the July Effect

The Buzz

Much as the quality of hospital care typically dips when new residents start, a phenomenon dubbed “The July Effect,” so too there is an old joke that the quality of journalism goes south during the summer as vacations loom large.

 A recent story by Paul Haven of the Associated Press, “Famously Loquacious Fidel Castro Discovers Brevity,” will do little to change impressions of lazy summer journalism. The piece investigates uncharacteristically terse and esoteric statements from the former Cuban president, known best for his five-hour speeches and Castro “charisma.” Lately, Castro has released strange statements on everything from white mulberry’s virtues to the fact that yoga masters “can do things with the human body that can hardly be imagined.”

 This had the potential to be interesting story that traced Castro’s movement from a deeply powerful—if flawed—leader to a more diminished figure. If Haven could have placed this transformation in the context of Fidel’s life or the country’s history, even better. Instead, the author knits together sketchy comparisons and quotes from internet comment boards.

 Describing the befuddlement of many citizens after Castro used the ambiguous term “FC,” Haven attempts to underscore his point using the least reliable or authoritative source possible: a comment chain on the internet. “I WOULD APPRECIATE IF THE COMMANDER IN CHIEF, OR ONE OF HIS AIDES, EXPLAINS WHAT ARE THE FC,” a poster writes. This being the Internet, an answer comes shortly: “‘For me, it’s clear what FC stands for,” another commenter ventures, before listing a string of vulgarities.

 The writer also makes clunky comparisons between Castro’s short “Reflections” and tweets. Are we so starved for an adequate description or metaphor that we can only compare things to Twitter? Despite the fact that all of Castro’s statements are too long to be tweets, what relevance do these statements have to social media?

 Being writers themselves, journalists can usually handle stories about prose and oration with a certain deftness. Unfortunately, this patchwork howler has gone fishing.

TopicsAutocracy RegionsCuba

The Defense Lobby's Greatest Fear

The Skeptics

Bloomberg’s Roxana Tiron reports that Congress is nearing a deal to postpone some of the most contentious provisions of last year’s Budget Control Act (BCA) until March 2013 or later. This is good news for the Aerospace Industries Association (AIA), which has been lobbying since late last year to undo at least that portion of the BCA that pertained to the Pentagon’s budget (i.e. that portion that threatens to cut most deeply into its members’ profits).

Although the mechanics of sequestration’s across-the-board cuts are problematic, the scale of the Pentagon build-down would be modest by historical standards. And yet, the mere suggestion that sequestration might actually occur has sent the industry into apoplexy. The AIA’s campaign has included the release of a new report claiming that the BCA cuts could result in over one million lost jobs and warnings that hundreds of thousands of workers would be receiving pink slips just a few days before the November elections.

In short, sequestration is a horror show, a Texas chainsaw massacre, and the AIA’s public-relations effort is designed to scare the wits out of the audience. “Sequestration,” explains Della Williams, the chief executive of Fort Worth-based Williams-Pyro Inc., “is surgery with a chain saw.”

But just as some people aren’t easily scared by campy slasher flicks, there are still a few people in Washington—especially Grover Norquist, President of Americans for Tax Reform (ATR)—who are cheering for the guy with the chainsaw.

The two sides squared off in separate events last Thursday. At the Bloomberg Government Defense Conference, AIA President Marian Blakey, Reps. Norm Dicks (D-WA) and Randy Forbes (R-VA) and Sens. Carl Levin (D-MI) and John McCain (R-AZ) called for bipartisan compromise on taxes in order to fund further Pentagon spending increases. Judging from the number of times that speakers invoked his name, Norquist posed a greater threat to national security than China or Iran. Levin, in particular, scorned ATR’s famed taxpayers’ pledge and suggested that it was largely responsible for the impending catastrophe.

Norquist is characteristically unfazed by all this special-interest pleading for more money. While Blakey and her congressional friends were attempting to rally the troops and rustle up more money, Norquist was reaffirming his opposition to higher taxes—including the closing of tax loopholes that generate more revenue—at a meeting on Capitol Hill. There is no Pentagon-budget escape hatch in ATR’s pledge. If the defense industry wants more, it will have to get it from elsewhere in the budget.

The fight over sequestration, taxes and the defense budget reveals textbook cases of two perennial public-policy realities: the politics of concentrated benefits, diffuse costs; and the economics of the seen vs. the unseen.

With respect to the first case, the defense industry, broadly defined, benefits disproportionately from Pentagon spending. And that industry can count many interested parties within its coalition. In addition to the defense companies, including the executives and the shareholders, there are also the workers at these firms (often represented by a union). Then there are the mayors and local officials who represent communities that are home to defense firms.

Given what is at stake, it is understandable that all of these groups have amped up their lobbying efforts to fend off sequestration. To take just one example, a single F-35 will cost, on average, nearly $125 million ($112.5 million for the aircraft, plus another $22 million for the engine). Prime contractor Lockheed Martin spent $15 million on lobbying in 2011 and is expected to spend even more this year. Such expenses can easily be justified to investors and shareholders if they are seen as protecting the company’s cash cow.

Individual taxpayers, by contrast, have little incentive to organize and even less incentive to pool their money to fight against the AIA. The cost of the F-35, spread around to every taxpayer, amounts to about a dollar (if we just count the 122 million people who paid federal income taxes). Generally speaking, people do not scrutinize where every tax dollar goes; indeed, payroll-tax withholding causes Americans to ignore what they pay in monthly taxes.

A few groups, including Norquist’s ATR, try to offset this imbalance of interests, and they have been reasonably successful. But Norquist’s pledges would be worthless if voters didn’t agree with him. But many do. In this poll (.pdf), for example, half of all respondents were opposed to having their taxes go up in order to pay for higher Pentagon spending.

The AIA’s other line of attack—the claim that substantial cuts in military spending will have a devastating impact on the economy, resulting in a million or more lost jobs—reveals the age-old broken-window fallacy. The AIA wants people to focus on that which is seen—defense workers who are laid off—and to ignore any consideration of how the economy as a whole will be better off if the resources that had previously gone to building planes and rockets are allocated elsewhere in the economy. These transitions are certainly difficult and painful for the individuals and firms involved, but they can be expected, all other factors being equal, to have salutary aggregate effects, especially over the long term. I’ll have more to say on that point later this week, drawing on my previous study of San Diego in the late 1950s, the early 1990s and the early 2000s.

In the meantime, I encourage you to read a succinct explanation of the broken-window fallacy from Henry Hazlitt’s Economics in One Lesson. And, if you’re really motivated, consider reading a less succinct, but more colorful, discussion of the phenomenon by Hazlitt’s intellectual forefather, the French philosopher Frédéric Bastiat.

TopicsCongressDomestic PoliticsDefenseK StreetPolitical EconomyState of the MilitaryPolitics

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