David Boaz

This news report from the Washington Post is a striking example of the absurd costs of complex tariff systems:

Brand-new Ford Transit Connect vans, made in Spain, are dropped off at U.S. ports several times a month. First, they pass through customs — and then workers hired by the automaker start to rip the vehicles apart. The rear seats are plucked out. The seat belts in back go, too. Sometimes, the rear side windows are covered with painted plates. Any holes left in the floor are patched over. 

Why? Because there’s a 25 percent tariff on imported pickup trucks and work vans, but only a 2.5 percent tariff on passenger vans. So even with all the extra effort of building a passenger-quality van, and then dismantling it, it’s still cheaper to do that than to pay a substantial tax on the import. 

The story is also a reminder of how bad policies can linger for decades. In the early 1960s Europeans increased their purchases of American chicken. European governments responded by imposing tariffs on chicken imported from the United States. In retaliation, President Lyndon B. Johnson imposed a 25 percent tariff – known as the “chicken tax” – on potato starch, dextrin, brandy, and light trucks. Tariffs on the other products were eventually lifted, but the high tax on light trucks remains. Thus the counterproductive construction and destruction. And by the way, this is no secret; the Wall Street Journal wrote about Ford’s practice in 2009.

The Post goes on to report:

Tariff engineering has a long history.

In the 1880s, the Supreme Court ruled it was acceptable for a sugar importer to intentionally darken refined sugar with molasses to lower the grade and secure a lower duty. Three decades later, the court took up the case of a company accused of trying to evade a 60 percent duty on strung pearls by instead shipping loose pearls with holes pre-drilled for stringing. Those faced only a 10 percent duty….

For example, some athletic shoes, such as Converse All-Stars, come with just enough fuzzy cloth on the rubber soles to qualify them as lower-duty slippers. In the early 1980s, the United States imposed a tariff on motorcycles with engines larger than 700 cubic centimeters in a bid to protect U.S.-based Harley-Davidson, so Japanese companies turned to making 699-cubic-centimeter motorcycles instead.

[See https://www.cato.org/publications/policy-analysis/taking-america-ride-politics-motorcycle-tariffs]

Sugar import quotas also create opportunities for gaming the system, which the government tries to block. In 1985, the Wall Street Journal and then the New York Times reported that the Reagan administration had slapped emergency quotas on “edible preparations” such as jams, candies, and glazes—and even imported frozen pizzas from Israel—lest American companies import such products for the purpose of extracting the sugar from them. Apparently it might have been cheaper to import pizzas, squeeze the tiny amount of sugar out of them, and throw away the rest of the pizza than to buy sugar at U.S. producers’ protected prices.

A U.S. tariff is a tax on the American people. That’s easy to see. American consumers and businesses are forced to pay higher prices for the goods they want to buy. What is not so obvious is all the deadweight loss such obstacles to trade create. Businesses and consumers may have to shift their purchases to a less-preferred domestic alternative. And as the reports above indicate, companies sometimes go to great lengths to get around the obstacles created by tariffs, quotas, and other barriers to trade. Just think of all that wasted labor and material involved in getting a Ford passenger van from a Spanish factor to an eager American consumer. This is pure waste, waste that literally makes America poorer. In the case of the chicken tax, the waste is related to a 1963 executive order that’s never been rescinded. The sugar quotas benefit a highly concentrated, politically effective industry and impose costs on far more businesses.

Tariffs impose costs on Americans. We should be reducing and eliminating them, not expanding them.

The top left-hand story on the front page of the Metro section of today’s Washington Post:

Lawyers for the District argued Wednesday for the dismissal of a lawsuit that challenges city regulations requiring some child-care workers to obtain associate degrees or risk losing their jobs….

The requirements … stipulate that child-care center directors must earn bachelor’s degrees and assistant teachers and home-care providers must earn Child Development Associate (CDA) certificates.

Meanwhile, just across the page, in the top right-hand space:

About 1,000 teachers in D.C. Public Schools — a quarter of the educator workforce — lack certification the city requires to lead a classroom, according to District education leaders.

So how about this compromise: the child-care licensing requirement will go into effect, but it will be enforced by the crack management team at DC Public Schools?

On Wednesday members of the Senate Finance Committee questioned Secretary of Commerce Wilbur Ross about the costs to American businesses of the administration’s tariffs. Ross was unsympathetic:

When Thune warned that the drop in soybean prices (caused by China’s retaliatory tariffs) was costing South Dakota soybean farmers hundreds of millions of dollars, Ross responded by saying he heard the price drop “has been exaggerated.”…

Ross told Sen. Mike Enzi (R-Wyo.) that he’s heard the rising cost of newsprint for rural newspapers “is a very trivial thing,” and he told Sen. Benjamin L. Cardin (D-Md.) that it’s tough luck if small businesses don’t have lawyers to apply for exemptions: “It’s not our fault if people file late.”

That reminded me of then-First Lady Hillary Clinton’s response in 1993 to a small businessman about how her health care plan might raise his costs:

“I can’t go out and save every undercapitalized entrepreneur in America.”

Seems like lots of Washington operators don’t care much about the burdens that taxes, regulations, mandates, tariffs, and other policies impose on small businesses and their employees.

On page 5 of my Wall Street Journal this morning, and page 7 of my Washington Post, a full-page ad for Wells Fargo banners

Wells Fargo and NextEra Energy join together to fuel low-carbon economy throughout the U.S. 

Meanwhile, the front page of my Journal announces

Green-Power King Thrives on Government Subsidies

The article explains that NextEra Energy

has grown into a green Goliath, almost entirely under the radar, not through taking on heavy debt to expand or by touting its greenness, but by relentlessly capitalizing on government support for renewable energy, in particular the tax subsidies that help finance wind and solar projects around the country. It then sells the output to utilities, many of which must procure power from green sources to meet state mandates.

And also:

While environmentalists applaud NextEra’s commitment to building wind and solar farms outside Florida, they have criticized what they see as its attempts to slow the deployment of rooftop solar inside Florida where it would directly compete with its utility business.

As Wells Fargo tries to rescue its reputation after its account scandals, maybe it should forgo bragging about helping a company get heavy subsidies in order to sell its products to compelled buyers. Maybe as part of its apology and restitution, it should swear off participating in taxpayer-subsidized projects, as BB&T in 2006 vowed not to lend to projects that relied on eminent domain.

Would NextEra even be profitable without all these subsidies and mandates? At least it’s not Solyndra, the Obama-connected solar power company that left the taxpayers holding the bag for $500 million when it collapsed. (“Obama’s green-technology program was infused with politics at every level, The Washington Post found in an analysis of thousands of memos, company records and internal ­e-mails. Political considerations were raised repeatedly by company investors, Energy Department bureaucrats and White House officials.”)

Maybe we should drop all these subsidies, restrictions, mandates, and trade barriers and let the free market deliver the right mix of energy at the lowest cost.

In his Election Day tweet attacking Rep. Mark Sanford, President Trump declared that Sanford’s opponent, Katie Arrington, “is tough on crime and will continue our fight to lower taxes.” Well, maybe. She doesn’t mention either issue on her campaign website. (In fact, she has nothing but bland buzzwords about any issue.)

This tweet is typical. It seems like very time Trump tweets an endorsement or a criticism of a candidate, he calls the candidate “strong (or weak) on crime.” I count 60 Trump tweets since his inauguration that use the word “crime.” Some complain that he is being investigated for a “made up, phony crime” or charge Hillary Clinton with “many crimes.” But most seem to relate to a candidate: Dan Donovan is “strong on Borders & Crime.” Kevin Cramer of North Dakota is “strong on Crime & Borders.” Doug Jones is “WEAK on Crime.” Adam Laxalt is “tough on crime!” “Chuck and Nancy…are weak on Crime.” Ralph Northam is “weak on crime.” Also “VERY weak on crime!” “Keep our country out of the hands of High Tax, High Crime Nancy Pelosi.” And so on.

It’s not obvious that this makes political sense. Candidates aren’t talking much about crime, perhaps because they recognize the substantial decline in crime rates. In numerous Gallup polls over the past year, only 2 to 4 percent of Americans have identified crime as the country’s most important problem. Though about 50 percent of people say they worry a great deal about crime when asked that question directly.

But here’s the thing. Crime in the United States is in fact way down. 

Here’s a long-term look at the most visible crime, homicide:

Here’s a picture of broader crime rates:

And yet, as the same source illustrated, at the very time when crime rates had fallen steadily and substantially for 20 years, 68 percent of Americans said the national crime rate was getting worse. (Crime rates continued to fall after 2011, though there was an uptick in murders in 2015 and 2016. The rate appears to have fallen in 2017.)

Of course, the president is better informed than average Americans. Surely White House staff have explained the crime statistics to President Trump. So why does he talk about “this American carnage” and pound away at the “crime” issue when endorsing candidates who never talk about it? Perhaps it’s part of his continuing use of racially charged language. Perhaps “crime and borders” is just shorthand for the kinds of social change he thinks his voters fear. Or maybe it reflects the fact that he grew up in New York City during a time of sharply rising crime. We all get ideas in our youth (“American cars aren’t well made”) that may stick with us even us as the facts change.

Whatever the reason, it seems curious that he so often cites “strong and crime” as the reason to support political candidates who haven’t talked about crime.

The reviews of HBO’s “Fahrenheit 451” haven’t been so good, but at least the publicity should lead more people to read a great dystopian novel. Talking about the book many years later, Bradbury said, “I wasn’t worried about freedom, I was worried about people being turned into morons by TV…the moronic influence of popular culture through local TV news and the proliferation of giant screens and the bombardment of factoids.” If only he could see our current culture, where TV news agitates viewers into warring tribes.

But he certainly portrayed a society in which an authoritarian government burns books, and most people have seen it as a powerful warning about censorship. Which makes it particularly ironic, and more significant every day, that Fahrenheit 451 itself was censored – trimmed, expurgated, bowdlerized – by people who no doubt thought they had the best of intentions.

When Bradbury discovered what had been done, he wrote this Coda to the 1979 Del Rey edition. It’s worth reading today. What he said then is still true: “There is more than one way to burn a book. And the world is full of people run­ning about with lit matches.” Read the Coda, then read the book:

About two years ago, a letter arrived from a solemn young Vassar lady telling me how much she enjoyed reading my experiment in space mythology, The Martian Chronicles.

But, she added, wouldn’t it be a good idea, this late in time, to rewrite the book inserting more women’s characters and roles?

A few years before that I got a certain amount of mail concerning the same Martian book complaining that the blacks in the book were Uncle Toms and why didn’t I “do them over”?

Along about then came a note from a Southern white suggesting that I was prejudiced in favor of the blacks and the entire story should be dropped.

Two weeks ago my mountain of mail delivered forth a pipsqueak mouse of a letter from a well-known publishing house that wanted to reprint my story “The Fog Horn” in a high school reader.

In my story, I had described a lighthouse as hav­ing, late at night, an illumination coming from it that was a “God-Light.” Looking up at it from the view-point of any sea-creature one would have felt that one was in “the Presence.”

The editors had deleted “God-Light” and “in the Presence.”

Some five years back, the editors of yet another anthology for school readers put together a volume with some 400 (count ‘em) short stories in it. How do you cram 400 short stories by Twain, Irving, Poe, Maupassant and Bierce into one book?

Simplicity itself. Skin, debone, demarrow, scarify, melt, render down and destroy. Every adjective that counted, every verb that moved, every metaphor that weighed more than a mosquito—out! Every simile that would have made a sub-moron’s mouth twitch—gone! Any aside that explained the two-bit philosophy of a first-rate writer—lost!

Every story, slenderized, starved, bluepenciled, leeched and bled white, resembled every other story. Twain read like Poe read like Shakespeare read like Dostoevsky read like—in the finale—Edgar Guest. Every word of more than three syllables had been ra­zored. Every image that demanded so much as one instant’s attention—shot dead.

Do you begin to get the damned and incredible picture?

How did I react to all of the above?

By “firing” the whole lot.

By sending rejection slips to each and every one. By ticketing the assembly of idiots to the far reaches of hell.

The point is obvious. There is more than one way to burn a book. And the world is full of people run­ning about with lit matches. Every minority, be it Baptist / Unitarian, Irish / Italian / Octogenarian / Zen Buddhist, Zionist/Seventh-day Adventist, Women’s Lib/ Republican, Mattachine/ Four Square Gospel feels it has the will, the right, the duty to douse the kerosene, light the fuse. Every dimwit editor who sees himself as the source of all dreary blanc-mange plain porridge unleavened literature, licks his guillotine and eyes the neck of any author who dares to speak above a whisper or write above a nursery rhyme.

Fire-Captain Beatty, in my novel Fahrenheit 451, described how the books were burned first by minori­ties, each ripping a page or a paragraph from this book, then that, until the day came when the books were empty and the minds shut and the libraries closed forever.

“Shut the door, they’re coming through the win­dow, shut the window, they’re coming through the door,” are the words to an old song. They fit my life-style with newly arriving butcher/censors every month. Only six weeks ago, I discovered that, over the years, some cubby-hole editors at Ballantine Books, fearful of contaminating the young, had, bit by bit, censored some 75 separate sections from the novel. Students, reading the novel which, after all, deals with censorship and book-burning in the fu­ture, wrote to tell me of this exquisite irony. Judy-Lynn Del Rey, one of the new Ballantine editors, is having the entire book reset and republished this summer with all the damns and hells back in place.

A final test for old Job II here: I sent a play, Leviathan 99, off to a university theater a month ago. My play is based on the “Moby Dick” mythology, dedi­cated to Melville, and concerns a rocket crew and a blind space captain who venture forth to encounter a Great White Comet and destroy the destroyer. My drama premieres as an opera in Paris this autumn.

But, for now, the university wrote back that they hardly dared do my play—it had no women in it! And the ERA ladies on campus would descend with ball-bats if the drama department even tried!

Grinding my bicuspids into powder, I suggested that would mean, from now on, no more productions of Boys in the Band (no women), or The Women (no men). Or, counting heads, male and female, a good lot of Shakespeare that would never be seen again, especially if you count lines and find that all the good stuff went to the males!

I wrote back maybe they should do my play one week, and The Women the next. They probably thought I was joking, and I’m not sure that I wasn’t.

For it is a mad world and it will get madder if we allow the minorities, be they dwarf or giant, orangu­tan or dolphin, nuclear-head or water-conversation­ist, pro-computerologist or Neo-Luddite, simpleton or sage, to interfere with aesthetics. The real world is the playing ground for each and every group, to make or unmake laws. But the tip of the nose of my book or stories or poems is where their rights end and my territorial imperatives begin, run and rule. If Mor­mons do not like my plays, let them write their own. If the Irish hate my Dublin stories, let them rent type-writers. If teachers and grammar school editors find my jawbreaker sentences shatter their mushmilk teeth, let them eat stale cake dunked in weak tea of their own ungodly manufacture. If the Chicano intel­lectuals wish to re-cut my “Wonderful Ice Cream Suit” so it shapes “Zoot,” may the belt unravel and the pants fall.

For, let’s face it, digression is the soul of wit. Take philosophic asides away from Dante, Milton or Hamlet’s father’s ghost and what stays is dry bones. Laur­ence Sterne said it once: Digressions, incontestably, are the sunshine, the life, the soul of reading! Take them out and one cold eternal winter would reign in every page. Restore them to the writer—he steps forth like a bridegroom, bids them all-hail, brings in variety and forbids the appetite to fail.

In sum, do not insult me with the beheadings, finger-choppings or the lung-defiations you plan for my works. I need my head to shake or nod, my hand to wave or make into a fist, my lungs to shout or whis­per with. I will not go gently onto a shelf, degutted, to become a non-book.

All you umpires, back to the bleachers. Referees, hit the showers. It’s my game. I pitch, I hit, I catch. I run the bases. At sunset I’ve won or lost. At sunrise, I’m out again, giving it the old try.

And no one can help me. Not even you.

In 2005 the Malaysian political leader Anwar Ibrahim visited the Cato Institute. In the photo at right, I’m giving him a copy of my book Libertarianism: A Primer, which he told me he had already read – in prison. What a thing for an author to hear! After becoming leader of the opposition People’s Justice Party, he was again imprisoned on trumped-up charges in 2015. He remains in prison today. But thanks to yesterday’s elections, it now seems that Anwar may soon not only be released from prison but be named prime minister.

It’s a complicated story. Anwar was a youth leader and rising star in UNMO, the party that has ruled Malaysia for six decades since independence. He became finance minister and deputy prime minister under Mahathir Mohamad, who became well known for his defense of “Asian values” against supposedly Western notions of democracy and human rights. But Anwar fell out with Mahathir over the Asian crisis and charges of corruption. In 1998 Anwar was removed from office and then jailed in a trial that was criticized around the world. Amnesty International said that his trial “exposed a pattern of political manipulation of key state institutions including the police, public prosecutor’s office and the judiciary.” He was released in 2004 but banned from participation in politics for five years. After his return to opposition politics, he again angered the ruling party and was sent back to prison. Throughout his travails he was smeared in state-dominated media as homosexual, pro-Israel, and pro-American, the usual sorts of charges that authoritarian governments make against their critics. It should be noted that Anwar is no saint, and he tried to turn some of the same charges back against his persecutors.

Meanwhile, Mahathir retired as the world’s longest-serving elected leader in 2003. He became a sharp critic of his UNMO successors, Abdullah Ahmad Badawi and later Najib Razak. This year, at age 92, he became the opposition candidate for prime minister. From jail Anwar supported him. This week Mahathir led his new party to victory and has just been sworn in as prime minister. He has promised to release Anwar from prison and make him prime minister within two years. Observers are hopeful that Anwar’s leadership would mean reform in Malaysia: an end to kleptocracy and corruption and perhaps an economy that is “inclusive, rules-based and competition-oriented with a large, well-funded social safety net,” much like Singapore. According to the Human Freedom Index, Malaysia could use improvement in all areas.

Last year I complained that President Trump was welcoming Anwar’s jailer, Najib Razak, to the White House. Now of course Anwar is joining forces with his original jailer. What a long strange trip it’s been. But hopefully it’s not over.

I wrote last month that new regulations and taxes in California’s legalized marijuana regime are likely to result in a situation in which

a few people are going to get rich in the California marijuana industry, and fewer small growers are going to earn a modest but comfortable income. Just one of the many ways that regulation contributes to inequality.

Now the East Bay Express in Oakland offers a further look at the problem:

Ask the people who grow, manufacture, and sell cannabis about the end of prohibition and you’ll hear two stories. One is that legalization is ushering a multibillion-dollar industry into the light. Opportunities are boundless and green-friendly cities like Oakland are going to benefit enormously. There will be thousands of new jobs, millions in new tax revenue, and a drop in crime and incarceration.

But increasingly you’ll hear another story. The state of California and the city of Oakland blew it. The new state and city cannabis regulations are too complicated, permits are too difficult and time consuming to obtain, taxes are too high, and commercial real estate is scarce and expensive. As a result, many longtime cannabis entrepreneurs are either giving up or they’re burrowing back into the underground economy, out of the taxman’s reach, and unfortunately, further away from the social benefits legal pot was supposed to deliver….

Some longtime farmers, daunted by the regulated market’s heavy expenses, taxes, and low-profit predictions, have shrugged and gone back to the black market where they can continue to grow as they always have: illegally but free of hassle from the state’s new pot bureaucrats armed with pocket protectors and clipboards.

Not all the complaints in the two-part investigation are about taxes and overregulation. Some, especially in part 1, are about “loopholes” in the regulations that allow large corporations to get into the marijuana business and about “dramatic changes to Humboldt County’s cannabis culture, which had an almost pagan worship of a plant that created an alternative lifestyle in the misty hills north of the ‘Redwood Curtain.’”

But there’s plenty of evidence that regulations are more burdensome on newer and smaller companies than on large, established companies. Indeed, regulatory processes are often “captured” by the affected interest groups. The Wall Street Journal confirmed this just yesterday, reporting that “some of the restrictions [in Europe’s GDPR online privacy regulations] are having an unintended consequence: reinforcing the duopoly of Facebook Inc. and Alphabet Inc.’s Google.”

Marc Thiessen, a columnist at the Washington Post, is highly upset that the Senate Foreign Relations Committee may not approve President Trump’s nomination of Mike Pompeo to be Secretary of State:

For the first time in the history of the republic [since the committee started recording votes in 1925], it appears increasingly likely that a majority of the Senate Foreign Relations Committee will vote against the president’s nominee for secretary of state. If this happens, it would be a black mark not on Mike Pompeo’s record, but on the reputation of this once-storied committee.

Thiessen seems to think that the role of the Senate Foreign Relations Committee, and by extension the United States Senate, is to approve a president’s nominees. But of course, the Constitution provides that “The President … shall nominate, and by and with the Advice and Consent of the Senate, shall appoint Ambassadors, other public Ministers and Consuls, Judges of the supreme Court, and all other Officers of the United States.” The Heritage Foundation’s Guide to the Constitution affirms that “the Senate has complete and final discretion in whether to accept or approve a nomination.” The Foreign Relations Committee is today considering whether to consent to this nomination. The Senate as a whole may choose to reject the negative recommendation and consent to the nomination. (See also the novel and movie Advise and Consent, on TCM this Friday.)

It’s not that members of the committee don’t have legitimate grounds on which to withhold consent. Sen. Rand Paul, a key player as he is likely to be the only Republican on the committee to oppose the nomination, says:

Director Pompeo has not learned the lessons of regime change and wants regime change in Iran….

President Trump sought to break with the foreign policy mistakes of the last two administrations. Yet now he picks for Secretary of State and CIA Director people who embody them, defend them, and, I’m afraid, will repeat them. I will not support their nominations.

One need not agree with that criticism to acknowledge that it’s a reasonable concern on which to reject a nominee.

Thiessen is a former speechwriter to Secretary of Defense Donald Rumsfeld and President George W. Bush, which might give him an executive-branch view of Congress’s role. Before that, however, he served for six years as spokesman and senior policy advisor to Senate Foreign Relations Committee Chairman Jesse Helms, whose willingness to use his position to block presidential nominees was well known. He mentions Helms’s support of President Clinton’s nomination of Madeleine Albright for Secretary of State, but omits the nominees Helms blocked or tried to block, such as Massachusetts governor William Weld and former senator Carol Moseley-Braun.

Thiessen concludes his excoriation of the Senate Foreign Relations Committee with a flourish: Assuming he is confirmed by the Senate, Pompeo “would be more than justified in determining that the State Department is best served by working closely with the appropriators and Senate leadership, and bypassing a committee that can’t make policy, can’t legislate and can’t lead.”

His real complaint, however, is not that the committee can’t lead. It is that the Senate Foreign Relations Committee won’t blindly follow.