A Wall Street Journal headline writer likely sensed something amiss with calls by U.S. steel producers for more protectionism. The August 12, 2015 WSJ print edition article by John W. Miller was titled: “Steelmakers Lodge New Trade Gripe.” The online version, dated August 11, drops the “Gripe” for a less skeptical headline: “U.S. Steelmakers Again Ask for Tariffs on Imports” (as usual Google full title to find article ungated).
The article notes this was the third trade complaint of summer 2015 by U.S. steel producers, claiming foreign firms were “dumping” steel below costs:
The request targeted imports of hot-rolled coil—used in making cars—from Australia, Brazil, Japan, South Korea, the Netherlands, Turkey and the U.K. China wasn’t named in the petition because the U.S. already has tariffs on imports of that kind of steel from China. The petition was filed with the U.S. Commerce Department and the U.S. International Trade Commission.
This Wall Street Journal article doesn’t mention “dumping” by name, but a July 15, 2015 Duluth News Tribune article does: “Trade commission agrees foreign steel was ‘dumped’ in U.S.“
The U.S. International Trade Commission on Friday announced a preliminary determination that imports of corrosion-resistant steel from China, India, Italy, South Korea and Taiwan injured the U.S. steel industry.
The companies claim that the increased below-cost imports of steel have reduced demand, in some cases forcing mill closures that have led to layoffs at Minnesota operations. …
“We are pleased the ITC has confirmed that the flood of unfairly traded imports of corrosion-resistant sheet steel has materially impacted our shipments, pricing and profitability,” said Mark D. Millett, chief executive office of Steel Dynamics. “SDI believes in fair trade, but the U.S. has become a dumping ground for world excess steel capacity.”
However, the WSJ mentions the actual price of the hot-rolled coil steel used by U.S. carmakers and other manufacturers is actually higher than in Europe and Asia:
The problem for U.S. steelmakers is sluggish prices, which are held down by inexpensive imports. The U.S. index price for hot-rolled coil, a benchmark product, has fallen more than 20% this year to $468 per ton.
That is still about $100 higher than the price in Europe and $200 above that in Asia, according to steel buyers, making the U.S. a tempting market.
Wait… what? This hot-rolled coil steel–key for U.S. automakers–is 20% less expensive in Europe and 40% less expensive in Asia? Doesn’t that give a significant cost advantage to European and Asian automakers and other foreign manufacturers with access to significantly less-expensive steel?
If steelmakers in “Australia, Brazil, Japan, South Korea, the Netherlands, Turkey and the U.K.” are dumping steel in the U.S., they must be ultra-dumping steel in Europe and Asia. Either that or shipping costs are extraordinary low to U.S. buyers.
Imports of hot-rolled steel have increased according to steel industry executives, with the implication that foreign firms are dumping excess capacity onto U.S. markets:
Imports of hot-rolled steel from the seven countries named in the latest petition increased by about 73% from 2012 to 2014, rising from 1.9 million tons to 3.3 million tons, AK Steel said.
Wow, 73% is a big increase! But also between 2012 and 2014 was a huge increase in U.S. demand, with booming rail and oil and gas infrastructure as well as auto manufacturing expanding, rising 19% in 2012, 7% in 2013, and 5.4% in 2014.
A May, 7, 2015 WSJ article, “U.S. Steel CEO Says Tariffs Could Be Needed On Chinese Imports” quotes Mr. Longhi, the new head of U.S. Steel, who has been cutting costs, laying off workers and boosting stock prices (and his pay). In addition to streamlining steel production, Mr. Longhi is trying to raise tariffs on imported steel, particularly steel from China:
Mr. Longhi blames the bulk of his latest woes on imports, especially from China. The U.S. imported 615,171 tons of steel from China during that time, up 25% from the same period a year before. Mr. Longhi said a failure to impose more tariffs on Chinese imports was an American political “weakness.”
In this article, steel tube is the focus, where demand has been hit hard and unexpectedly this year, after oil prices dropped by half last fall, and demand for steel pipe by shale drillers dropped soon after. The article blames imports:
Imports have been especially hurtful to the company’s business of making steel pipe and tubs for the oil and gas industries.
Consider though that for U.S. manufacturers and U.S. consumers, lower prices for steel is a good thing. Only for the U.S. steel industry is lower-cost imported steel a problem.
Students researching U.S. trade policy with China can research these ongoing debates over steel imports and tariffs.
Tim Worstall in Forbes puts the question of steel tariffs this way in a June 4, 2015 column:
There’s two ways that we can describe the attempt by the US steel industry to gain anti-dumping tariffs against China and other countries. The first is that it is an attempt by that US business sector to protect themselves from that foreign competition. The other is that it’s an insistence that all Americans should become poorer in order that those profits and those jobs should be protected. Both of these descriptions are true: and the second follows logically from the first.
U.S. steel producers have continued their call for higher tariffs on Chinese steel. “U.S. steel producers to file charges against Chinese competitors,” (Reuters, September 22, 2016) reports:
The U.S. Commerce Department last week set preliminary antidumping duties ranging from 63.86 percent to 76.64 percent on stainless steel sheet and strip imports from China after preliminary findings showed the imports were being dumped in the U.S. market at below fair value.
The petition alleges that Chinese producers diverted their steel shipments to Vietnam “immediately” after the duties were imposed.
According to the petition, Chinese steelmakers sent their shipments to Vietnam, where they were modified to make them corrosion-resistant, and then sent them to the United States by paying Vietnam’s U.S. tariff rate, which is lower than for China.
Economist Richard Ebeling posted on Facebook a quote from an 1830s economics textbook, to give people a sense of economic principles taught nearly two centuries ago:
Here is what economics books used to sound like, from Thomas Cooper’s “Lectures on the Elements of Political Economy” (1830), on the principles and policies of economic logic and understanding on the benefits of freedom of trade and enterprise:
“The true principles of Political Economy, teach us that a system of restrictions and prohibitions on commercial intercourse, cuts off the foreign market, diminishes the number of buyers, and the demand for our national produce; hence, the consumer is compelled to pay more to the home monopolist.
“Hence, the wealth of the nation is wasted; every consumer is abridged of comforts that he might otherwise procure, and his means of purchasing even home-commodities are diminished.
“They teach us also, that men should be permitted, without the interference of government, to produce whatever they find it their interest to produce; that they should not be prevented from producing some articles, or bribed to produce others.
“That they should be left unmolested to judge of and pursue their own interest; to exchange what they have produced when, where, with whom and in what manner they find most profitable and convenient; and not be compelled by theoretical statesmen to buy dear and sell cheap; or to give more, or get less, than they might do if left to themselves, without government interference or control.
“That no favored or privileged class should be fattened by monopolies or protections to which the rest of the community are forced to contribute.
“Such are the leading maxims by means of which Political Economy teaches how to obtain the greatest sum of useful commodities at the least expense of labor. These are indeed maxims directly opposed to the common practice of governments, who think they can never govern too much; and who seek to prey upon the vitals of the community.”
This remains wisdom for our own time.
Students debating U.S./China policy have an opportunity to learn the principles of international trade, and apply these principles to various reform proposals.
Much has changed in the Middle East over the last twenty years. Israel’s economy has shifted to more open and less socialist, and average income has increased. The Israeli government still controls much of the economy and subsidizes money-losing firms, but a vibrant tech sector is home for hundreds of innovative startups.
Christopher Schroeder’s Startup Rising: The Entrepreneurial Revolution Remaking the Middle East gives a glimpse of what to expect as venture capital first supports dozens, then hundreds, and soon thousands of Middle East entrepreneurs from the Palestinian territories to Jordan, Lebanon, the UAE, Egypt and countries now in turmoil.
Imagine the Middle East with millions carrying hand-held computers. That’s not some distant utopian tech future but today in the Middle East. For the over 75 million people in Turkey, nearly 90% have cell phones. Cell phones network friends and relatives, speed business communication, and allow access to news and information from the outside world.
The stories from Startup Rising paint an optimistic future for the Middle East. Israel already enjoys a dynamic tech sector, and now capital and expertise are surging into nearby Arab countries.
More on Startup Rising is available by “looking inside” on Amazon. Plus online videos with Christopher Schroeder, the author, tell his story. Here is link to a Google for Entrepreneurs video from December, 2013. About five minutes in, this Economist article is mentioned with its focus on “Startup Spring” in the Middle East. Excerpt from The Economist:
The story sounds like a common one from Silicon Valley or Silicon Roundabout, London’s start-up district. But Ms Taher tells it in a café in Amman. She is just one of several hundred entrepreneurs, many of them women (see article), who have started online firms in Jordan’s capital in recent years, making it one of the Middle East’s leading start-up hubs. Even more surprising, such clusters (“ecosystems” in the lingo) have been popping up all over a region that is better known for armed conflict and political strife. Whether in Beirut, Cairo, Dubai, Riyadh or even Gaza City, small technology firms are multiplying, creating a sort of “start-up spring”. (Link to source.)
Here is a review of Schroeder’s book from the Stanford Social Innovation Review. Excerpt:
In 2001, when Save the Children wanted to launch a version of Junior Achievement in Jordan, they asked Salti to be country director of what they called “INJAZ Jordan,” or Jordan Achievement. Holding her freshly minted MBA from Northwestern, Salti accepted, eager to return home and make an impact. She later would found a regional INJAZ office to spread the model across fourteen countries in the Middle East.
INJAZ was one of the earliest “private public partnerships,” as they are commonly called today. Salti and her mother started with a USAID grant that matched contributions from local businesses, and chose schools in conjunction with the Ministry of Education. Their goal was to hold additional classes at the end of each day to not only supplement education, but also to focus on job-related skills and to push kids to think about entrepreneurship and develop their own ideas. Their first volunteers were friends and family, and they soon began to recruit local business leaders and their staffs to mentor and train local youth in after-school programs.
Junior Achievement in Jordan also teaches entrepreneurship to young people. Junior Achievement Middle East and North Africa on their JA website.
Segment from a Milken Institute panel with Christopher Schroeder.
Instead of–or in addition to–advocating a two-state Israel/Palestine, U.S. policy could encourage technology entrepreneurs across the Middle East. The U.S. could promote reduced barriers to funding new enterprises and development and marketing their products.
Better policies would encourage employment and boost technology firms. Reforming broken or outdated U.S. policies helps promote prosperity in the Palestinian territories and across the Middle East.
Also an entrepreneurial success story: “Palestinians attempt to create their own start-up nation,” (Financial Times, May 1, 2016):
Less than five years later, Yamsafer is one of the region’s largest hotel booking sites, according to its founder. It recently closed a $3.5m funding round in one of the biggest venture capital deals the Israeli-occupied Palestinian territories have seen.
Yamsafer employs 70 people in Ramallah, a place where too many young university graduates are chasing too few jobs. “The people we hire are more hungry than people you would have hired in Dubai, Jordan or elsewhere,”
A Princeton study claimed U.S. governance is more an oligarchy now than a democracy and offered this definition of an oligarchy:
An oligarchy is a system where power is effectively wielded by a small number of individuals defined by their status called oligarchs. Members of the oligarchy are the rich, the well connected and the politically powerful, as well as particularly well placed individuals in institutions like banking and finance or the military.
For the Public Forum U.S./Israel two-state topic, residents of the Palestinian territories currently lack an option to consent to their governance. Without consent, how can governance of the Palestinian territories be legitimate? From the U.S. Declaration of Independence:
We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness. — That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed,
Opposition to Israeli policies unites Palestinians, but like other Middle East/North Africa countries and territories, tribal conflicts make democratic reform difficult. Would a future Palestinian state develop into a peaceful democracy, a seething tribal conflict, or something in-between?
“7 Things to Consider Before Choosing Sides in the Middle East Conflict,” (Huffington Post, July 28, 2014), was written during the 2014 Israel-Gaza conflict. The author is critical of both sides in the conflict, but concludes a two-state solution is needed. The author notes a “tribal” conflicts in that Jewish people support Israel and Muslims side with Palestinians.
Across the Arab world though, deeper tribal and clan relationships play a major role. “Palestinian Tribes, Clans, and Notable Families,” (Center for Contemporary Conflict, 2008?) explains why clans are stronger when states are weaker:
The clan structure in Palestine is far more consequential than the Bedouin tribes, and has become even more important since the breakdown of the Palestinian Authority structures during the second uprising, or intifadat al-Aqsa, beginning in 2000. A clan, or hamula (plural: hama’il), will consist of at least several extended families (a’ila) claiming a shared ancestry, and linked through the father’s male line. …
Where states are strong and can reliably protect citizens, clans weaken; where states are weak, clans are strong. This has become the central reason why Palestinian clans have flourished both under Israeli occupation and under conditions of PA breakdown. …
The study also outlines the importance of “Notable Families”:
The third clan-like grouping in Palestine in the urban elite notable family, a social formation typical throughout the Arab lands of the Ottoman Empire. Many of the most well known and prominent Palestinian families come from this notable, or a’yan, social class: Husayni, Nashashibi, Dajani, Abd al-Hadi, Tuqan, Nabulsi, Khoury, Tamimi, Khatib, Ja’bari, Masri, Kan’an, Shaq’a, Barghouthi, Shawwa, Rayyes, and others. These are extended families that dominated Palestinian politics until the 1980s, and are still relatively prominent today.
For the March Public Forum topic, “Resolved: The United States should no longer pressure Israel to work toward a two-state solution,” all sides in any debate should be familiar with the role of tribes, clans and “notable families” as oligarchs across the Arab world.
Critics of U.S. politics can also point to notable American families: from the Rockefeller, Ford, and Kennedy families of the 1900s, to more recent families like the Waltons (of Walmart), Kochs (oil, chemicals), Mars (candy), Cargill-MacMillan (grain), Cox (media), and Johnson (cleaning products). Here is Forbes 2016 gallery of richest families). (More recent notable families in politics would include Bush and Clinton families, and now Obama and Trump families).
Most “oligarchic” families in the U.S. struggle to maintain wealth and power past a generation or two, and rarely are able to slow or block upstart entrepreneurs from disrupting established business empires. Of all the successful tech entrepreneurs, few if any came from “ruling elite” families. The U.S. economy features a steady stream of self-made success stories, as suggested by the turnover in each year’s Forbes 400. From “How America’s Richest Self-Made Billionaires Built Huge Fortunes From Humble Beginnings“:
More than two-thirds of this year’s Forbes 400 are self-made billionaires. That’s 266 out of 400 who can say they built their fortunes from scratch. Among the self-made group are eight of the nation’s 10 richest, starting with the top three, Microsoft cofounder Bill Gates, Amazon CEO Jeff Bezos and legendary investor Warren Buffett.
Top-down political control is far greater across Middle Eastern countries where oligarchies hold political and economic control. Intermarried military, political, religious, and business elites make and enforce regulations that govern countries from Iran to Egypt. These elites take positions in government enterprises and bureaucracies and find similar positions for relatives. Efforts to remove oligarchies ruling in Libya and Syria led quickly to violence as tribal groups battled for regional and national political control.
Intermarried ruling clans have political implications as “notable families” are more tightly related than in western countries. “Health fears question Arab tradition of cousin marriages,” (Al Arabiya English, Art & Culture, April 4, 2915) notes:
In a report in the Middle East Journal of Family Medicine, Dr. Aida Al-Aqeel, pediatric geneticist and endocrinologist at Riyadh Military Hospital, wrote, “ In Saudi Arabia like other Middle Eastern countries, first cousin marriages account for 60 – 70% of all marriages, leading to uniquely common disorders which are either rare by Western standards or are unknown.
Apart from health issues, intermarriage within and among leading families makes for powerful oligarchic control. Entrepreneurs outside the ruling families find access to investment capital and government permits difficult, plus face heavy regulations (the initial source of Arab Spring protests).
The PBS program with Hernando de Soto, “Unlikely Heroes of the Arab Spring,” explains:
… this public television special presents, for the first time, the basic human and economic events that led to the Arab uprisings in the Middle East and North Africa. The program shows that “The Arab Spring” was less a political event than it was about the coming of the industrial revolution to a region where over 90% of the population lives and works outside the rule of law…
Amid provocative images of the Arab uprisings of 2010 and 2011, De Soto introduces the people and events that recently rocked the Arab world… it was his similarity to the 180 million informal Arab entrepreneurs; many of them under 30 and computer literate. Over 100 of them followed Bouazizi in acts of self-immolation.
A 2011 Freeman article, “The Roots of Egypt’s Revolt” reports on the history of Egypt’s oligarchic economic system (link to pdf handout). U.S. policy toward the Middle East has for decades helped maintain Egypt’s corrupt political and economic system. Consider: “United States has given the Egyptian government over $2.1 billion, including $1.3 billion in military aid, every year since 1980.” The Egyptian government is funded by tourism, the Suez Canal, and U.S. aid. That money flows to oligarchs who control the economy.
The ideal of citizens controlling a country through voting, critics argue, won’t solve America’s problems, won’t bring peace or prosperity to the Middle East, and won’t reduce terrorism around the world.
Voting can give people a say in their government. But constant elections and ever-changing constitutions add uncertainty and keep societies politicized.
The powers Constitutions give to governments are key, and each new government shouldn’t be able to draft its own constitution for majority vote. Egyptian President Morsi had his 2012 constitution approved, replacing a 2011 constitution passed after Mubarak was removed from power. Then in 2013 the Egyptian military suspended the 2012 constitution, ousted Morsi, and had a new new constitution passed in 2014. Constitutions that can be so easily altered and replaced do little to limit the size and scope of government power.
The U.S. purple-finger policy for Afghanistan, Ukraine, and the Middle East pushes people to vote and by their vote be obligated to submit to those elected. This is dangerous for tribal and clan-based countries. Kenya has some 42 tribes and when political parties were made legal, soon has 42 political parties.
Beyond the challenges of democracy in general are deeper problems of pushing political change on other countries, each with their own history and cultures. U.S. and U.K. governments, military, and aid agencies have been active in Middle East countries for over a century. This Cato Institution Commentary from 2003 reflects on President Bush’s initiative to promote democracy in the Middle East:
In his recent speech before the National Endowment for Democracy, President Bush pledged that the United States would embark on a decades-long commitment to bring democracy to the Middle East. But democracy is not a gift President Bush can bestow on people in distant lands.
Although the goal is laudable, the Bush administration will be disappointed with its effort to establish a stable liberal democracy in any Middle Eastern nation. That’s the verdict rendered by history, the contemporary reality of the region, and our own government experts.
Today, the Middle East lacks the conditions, such as a democratic political history, high standards of living, and high literacy rates, which stimulated democratic change in, for example, central Europe and East Asia. Ironically, many Arab countries are ruled by authoritarian leaders who are more liberal than the citizenry they lead.
People should have a say in their governance, but not a say in how other people’s lives should be governed. Richard Pipes in Property and Freedom points out that governments were considered just when they enforced the laws already existing in society. Grotius and other legal scholars emphasized that society was not the state, and the state’s legitimate reach did not extend to private life, liberty and property. These views of just government were debated and advocates of aristocratic divine rule and absolute authority for English kings lost that debate.
The Dutch model of a commercial society self-governed with royalty of limited power came to England with William of Orange, replacing the French model James II had installed by force across the country. (Highly recommended summer reading: 1688: The First Modern Revolution.)
When the candidate from one ethnic group or tribe loses, so does the entire ethnic group or tribe. All of a sudden they lose subsidies and their protection from complex and detailed regulations. When their politicians are out of power, police and other government officials see their property and businesses as fair game for exploitation or expropriation. When we in America hear news from abroad of “ethnic unrest” or “tribal conflict” it is usually between those in political power and those out of power.
“Terrorists” and “revolutionaries” are mostly tribal and ethnic gangs battling rival groups in government. When the Irish ran Boston, Irish entrepreneurs had an advantage in business. During the Jim Crow era in the South, African-American entrepreneurs and businessmen had to get permits from white government officials to run or expand their businesses. (Echoes of Jim Crow laws still survive in local licensing regulations, like this one restricting hair-braiding in Utah.)
Economic freedom is the key to peace and prosperity in the Middle East. Democracy can as easily fuel conflict as contribute to stable governance. Voting should be for deciding who will run the government, but not for what the government will do once in power. Constitutional economics is all about limiting government authority so that voting doesn’t turn into a war of all against all, of each ethnic, tribal, and regional group against all others.
Across the Middle East, fast population growth crashed into closed economies where elites control jobs in government and connected businesses, while majorities struggle to make a living in the informal sector. By “informal” we mean they work in enterprises without business permits. They live in houses their families may have lived in for generations, but they can’t get title for the land under their home. Life is insecure because livelihood is insecure. Only elites in the oligarchy have access to the formal legal system.
Because the U.S intervention in Iraq wasn’t able to promote economic freedom there, and secure opportunities for everyday people to start business enterprises, Iraq continues to be a failed state. Megan McArdle’s Atlantic article reports on the lack of economic freedom in Iraq. McArdle’s blog post on the story is here.
Hernando de Soto led a research team to detail economic problems in Egypt, and writes about the findings in a 2011 WSJ article “Egypt’s Economic Apartheid More than 90% of Egyptians hold their property without legal title.” (google full title for access to article.) This short post in The Atlantic quotes from the article:
The examples are legion. To open a small bakery, our investigators found, would take more than 500 days. To get legal title to a vacant piece of land would take more than 10 years of dealing with red tape. To do business in Egypt, an aspiring poor entrepreneur would have to deal with 56 government agencies and repetitive government inspections.
All this helps explain why so many ordinary Egyptians have been “smoldering” for decades. Despite hard work and savings, they can do little to improve their lives.
On the upbeat side, here is success story: “Palestinians attempt to create their own start-up nation,” (Financial Times, May 1, 2016):
Less than five years later, Yamsafer is one of the region’s largest hotel booking sites, according to its founder. It recently closed a $3.5m funding round in one of the biggest venture capital deals the Israeli-occupied Palestinian territories have seen.
Yamsafer employs 70 people in Ramallah, a place where too many young university graduates are chasing too few jobs. “The people we hire are more hungry than people you would have hired in Dubai, Jordan or elsewhere,”
Kevin Williamson, in “A Misunderstood ‘Diversity’” (National Review, March 7, 2017) quotes David Brooks from a New York Times oped:
For the life of me, I can’t figure out why so many Republicans prefer a dying white America to a place like, say, Houston.
Houston has very light zoning regulations, and as a result it has affordable housing and a culture that welcomes immigrants. This has made it incredibly diverse, with 145 languages spoken in the city’s homes, and incredibly dynamic — the fastest-growing big city in America recently. …
The large immigrant population has paradoxically given the city a very strong, very patriotic and cohesive culture, built around being welcoming to newcomers and embracing the future.
Brooks (and Williamson) note the lack of zoning allows for some ugly and jarring development, with without the complexities, delays, and litigation surrounding zoning, housing costs are low in Houston, welcoming immigrants from around the world. Families pay far less for rent or mortgages, keeping the cost of living lower.
Plus, housing the homeless is a lot less complicated and expensive in Houston. Around the country zoning regulations are used to block or delay low-cost housing as well as both public and private temporary housing for homeless people.
In “Houston’s solution to the homeless crisis: Housing — and lots of it,” (Seattle Times, June 14, 2016):
Rather than open more shelters, they focused on getting people into housing. They told charitable organizations to sign on or lose out on funding.
They built a computer system to assess the homeless, prioritize them based on vulnerability, then connect them with programs. And they collected data, lots of data.
The results are surprising and have Seattle officials taking note: There are an estimated 1,050 homeless people without shelter in the area, according to a recent count, down about 75 percent from 4,418 in 2011.
So… the Houston narrative supports the claim that restrictive housing regulations in and around major cities like Los Angeles, Seattle, San Francisco and the rest of the Bay Area, cause much of housing affordability and homelessness problems.
Against this claim is “What Housing Shortage?” (The Urbanist, November 22, 2016). The article argues there is a natural delay from employment booms to housing construction responses:
Based on the expanded survey of supply and demand in Seattle, there is virtually no general shortage of housing. The data show supply responds to demand, just not immediately. The delay is likely due to the natural lag in construction and, beginning in 2010 the effects of a global financial crisis. Not only are Seattle builders now matching new population growth with new housing units, they are building at or near the construction industry’s capacity. Skilled construction workers are hard to come by. Seattle has more cranes than any American city yet they are still in short supply.
I live just 20 minutes south of Seattle in the town of Burien. When Seattle had half the jobs it does now, nearby communities, like Green Lake, just north of Seattle, were mostly single-family homes. Now Seattle is booming, with Amazon, Starbucks, Nordstroms, many new tech firms, plus Microsoft and Boeing nearby, these communities still have single-family housing. Zoning regulations has prevented density increases that would have allowed tens of thousands to live closer to Seattle. These neighborhoods mostly have older and often run-down homes, and employees of Seattle firms face very high rents or struggle with congested commutes from distant suburbs.
“Meet the YIMBYs, Seattleites in Support of Housing Density:
A new movement is saying yes to urban density in all its forms” (November, 2016), looks at efforts to return to natural urban diversity and density policies:
By embracing the YIMBY concept, Maxana joins a growing community of activists, researchers, housing experts and community-based organizations that see growth as an opportunity to create housing for all the new people who want to live in cities, rather than a hostile invading force. These groups make up a loosely organized, informal coalition of organizations and individuals across the country and, indeed, the globe (groups using the YIMBY framework have sprung up from Melbourne to Helsinki to Iowa City), who believe that the root of housing affordability is a housing shortage, and that the solution to that shortage is simple: Build more housing.
For more on the economics of housing, see “How the Housing Market Works” (The Freeman, August 22, 2016). The author compares markets for expensive, middle, and less expensive homes to similar markets for new and used cars:
However, a family may buy a relatively run-down home and then renovate it gradually over time as they can afford to do so. Still, the less-well-off in each category could afford decent housing – especially if regulations allow old A and B housing to be divided into smaller units – in the same way that it’s possible for them to afford a decent used car.
Housing markets are similar to others, but homes last long than hamburgers. Imagine a society where rich people bought large hamburgers, ate just a third, then passed them on to others. Sounds unfair (and un-hygienic) with hamburgers, but with housing, used homes can be kept up or even improved (remodeled). If local housing demands increase, and local regulations allow, used homes can be expanded and sub-divided.
[I’m renting a small room in a single-family home in Costa Mesa, California while attending a local debate tournament. The homeowners rent two rooms via Airbnb. For $50 a night I can afford to be here. At $80 or $90 a night, the costs at local hotels, I probably couldn’t. — Greg Rehmke]
Nation-states can be more trouble than they’re worth. For the Middle East, federalism, soft-partition, enclaves, and charter cities offer non-state paths to peace and prosperity.
The March Public Forum topic: “Resolved: The United States should no longer pressure Israel to work toward a two-state solution.”
Consider the most economically-free place in the world, Hong Kong, is not a state and was long a colonial charter city before handed over (or back) to communist China in 1997.
The Fraser Institute’s Economic Freedom of the World: 2016 Annual Report: 2016 (September 16, 2016), is relevant for both the China policy topic and the Israel/Palestine two-state topic. The reports top-rated countries:
Hong Kong and Singapore, once again, occupy the top two positions. The other nations in the top 10 are New Zealand, Switzerland, Canada, Georgia, Ireland, Mauritius, the United Arab Emirates, and Australia and the United Kingdom, tied for 10th.
Small and independent formerly British colonial territories Hong Kong, Singapore, and United Arab Emirates (“Abu Dhabi, Ajman, Fujairah, Sharjah, Dubai, Ras al-Khaimah and Umm al-Qaiwain”), plus New Zealand, Canada, Australia make up the top ten. Also in the top ten is Switzerland, an association of mostly-independent and diverse cantons. (However, not all former British colonies are wealthy or economically free, and the success of many today should not be taken as a defense of British colonialism.)
What lessons for Israel, Palestine, and the U.S. can be found in these diverse economic success stories of charter cities, federal republics, and common law traditions?
The people of Hong Kong were poor in the 1950s, as were people living in Palestine. Through the 1950s, millions of impoverished refugees arrived in Hong Kong, escaping from communist China.
Across the Middle East as in Asia, World War II disrupted and impoverished millions. Hundreds of thousands fled or were expelled from Palestine in the 1948 Arab-Israeli war. Then hundreds of thousands in long-established Jewish communities in Arab countries fled or were expelled.
Over the decades since 1950, Hong Kong residents have prospered, as have residents of Israel, but the economy of the Palestinian territories and its residents have not prospered.
Hong Kong’s charter with England protected international trade and investment, and taxes stayed low. Economic freedom and a great port enabled Hong Kong to grow rapidly prosperous. Could similar charter cities and economic freedom policies have enabled Palestinians and others in the Middle East to similarly prosper?
Turmoil and violence in Syria today turns on the Alawite minority’s long political and military control. Syrian could have been a much more prosperous place had the Alawites been able to keep their enclave independent from Syria. “Syria’s Ruling Alawite Sect” (New York Times, June 14, 2011). The article was written before the Syrian conflict erupted from Arab Spring protests, and as part of explaining Alawite history mentions:
During the French Mandate, there was even a short-lived Alawite “state” based in and around Latakia, created in 1922. As William L. Cleveland explained in his “History of the Modern Middle East,” the Alawite state was “administratively separate from Syria until 1942.”
Enclaves, charter cities, and other administrated territories have a long history across Europe as well. Just check out a map of Europe in 15th Century.
Political decentralization invites conflicts, but also open political competition where families and businesses can relocate to better governed territories. For an introduction to political decentralization, the Hanseatic League, and the potential of charter cities, see “The Politically Incorrect Guide to Ending Poverty,” (The Atlantic, July/August, 2010):
[Economist and entrepreneur] Paul Romer [is] trying to help the poorest countries grow rich—by convincing them to establish foreign-run “charter cities” within their borders. Romer’s idea is unconventional, even neo-colonial—the best analogy is Britain’s historic lease of Hong Kong. And against all odds, he just might make it happen.
Could the West Bank be a candidate for a charter city, perhaps administrated by an Arab country like Dubai or UAE?
In the Arab world, similar Hong Kong size countries have flourished without full statehood. Consider the colonial history of UAE, discussed in “The United Arab Emirates – A Product of British Imperialism?” (British Scholar Society, January 16, 2012)
Until 1971, the seven shaikhdoms that were to form the UAE had been known as Trucial States and been part of Great Britain’s informal empire in the Persian Gulf. British power in the area had been based on an interdependent system of military presence, formal treaty relations with the Trucial States, Bahrain and Qatar, as well as informal political influence on the local rulers.
According to the Economic Freedom of the Arab World: 2016 Annual Report (Fraser Institute, December 3, 2016), Bahrain, Jordan and the United Arab Emirates (UAE) are the most economically free nations in the Arab world. From the Introduction:
Economic Freedom of the Arab World aims to provide a reliable and objective metric of economic policy throughout the Arab World. It measures the extent to which citizens of the nations of the Arab League are able to make their own economic decisions without limitations imposed by the government or by crony elites. The report provides sound empirical measurement of economic policy that can distinguish between phony reform that leaves economic and political power in the hands of crony elites, and real reform that creates new prosperity, entrepreneurship, and jobs, by opening business and work opportunities for everyone no matter whom they know.
Arab and Islamic societies have a rich trading tradition, one that celebrates markets open even to the humblest members of society. Economic freedom is consistent with that proud history and provides a path to a more prosperous and freer tomorrow. Economic freedom is simply the ability of individuals and families to take charge of their fate and make their own economic decisions—to sell or buy in the marketplace without discrimination, to open or close a business, to work for whom they wish or hire whom they wish, to receive investment or invest in others. As discussed later in this report, economic freedom has a proven fact-based record of improving the lives of people, liberating them from dependence, and leading to other freedoms and democracy. Unfortunately, many in the Arab world believe their nations have already gone through a period of free-market reform and that it hasn’t worked. This misconception deprives many of an economic alternative and vision for the future.
For Public Forum debaters considering past U.S. government pressure for a “two-state solution,” a focus on economic freedom provides an reform opportunity. It is true that Israel’s military control restricts freedom of movement and trade throughout the Palestinian territories, and Israeli officials and supporters insist this is to reduce possible terrorist attacks. But there are also major restrictions on doing business enforced by regulations and corruption of Palestinian officials.
Again, criticizing Palestinian officials is not to defend Israeli restrictions on economic freedom. But consider “Terrorists & Kleptocrats: How Corruption is Eating the Palestinians Alive,” (The Tower, June, 2014). (The Tower is Israel-based.)
By myopically focusing on “yes,” the U.S. is ensuring the Palestinian Authority will remain corrupt and therefore illegitimate in the eyes of the Palestinian people. My experience confirms Schanzer’s argument. The PA is an incredibly corrupt organization. So is its dominant party, Fatah. Together they form a motley crew of elites seeking to maintain power and the attenuating trappings, willing to do whatever it takes to ensure their power and position are not lost.
The 2016 Economic Freedom of the Arab World report rates the Palestinian Territories. Here is summary (page 23):
The Palestinian Territories overall score remained 7.3 and it stayed in 8th place. The Palestinian Territories maintained the same rank (5th) and score (7.7) in the size of government area. The territories’ score in rule of law declined to 5.7 from 6.2, coming in 13th, down from 10th last year. The Palestinian Territories had a score of 9.1 in sound money, up from 9.0, and ranked 11th, up from 12th. In the area of freedom to trade internationally, the Palestinian Territories scored 7.7, down from 7.8, with a rank of 8th, down from 6th. The rank in regulation remained the same as last year at 12th, with a score of 6.1, same as last year.
Comparing economic freedom in the PA to the freer and more prosperous UAE, Jordan, and Bahrain, the top three Arab countries, gives direction to reform proposals that the U.S. could encourage.
The report focuses on economic freedom’s role in increasing prosperity, creating jobs, and reducing poverty. …
“Hong Kong and Palestine; what makes a country?” (REB Research Blog), offers some history of colonial Hong Kong and Palestine and a discussion of international agreements on what makes a county.
Jeff Bezos and Elon Musk want to set up operations on the moon. “An exclusive look at Jeff Bezos’s plan to set up Amazon-like delivery for ‘future human settlement’ of the moon” (Washington Post, March 2, 2017) reports Bezo’s Blue Origin plans to to set up moon habitats by mid-2020. From separate story: “Jeff Bezos says NASA should return to the Moon, and he’s ready to help,” (Ars Technica, March 3, 2017):
Bezos explained the philosophy behind this idea. “We are hoping to partner with NASA on a program called Blue Moon where we would provide a cargo-delivery service to the surface of the Moon, with the intent over time of building a permanently inhabited human settlement on the Moon,”
The Washington Post also reported on Elon Musk’s plans for SpaceX moon flights in 2018: “Elon Musk’s SpaceX plans to fly two private citizens around the moon by late next year” (February 27, 2017).
The Diplomat asks “Are China and the US Set for a Showdown in Space?” (January 28, 2017). China’s interest is more economic than military, exploration, or for scientific research:
… Chinese views on space resources are particularly under-studied. Space resources deserve to be studied because of the potentially vast economic value and potential to cause inter-state conflict. … China conceptualizes space activity principally within the context of economic development, which has important implications for space resources and property.
Elon Musk and other private U.S. space companies also focus on economic opportunity, beginning with lucrative satellite launches, and preparing for space tourism for wealthy customers, and then looking at mining and other moon resource opportunities. Like high-definition televisions, the wealthy buy high-tech goods and services first. Their early high-dollar purchases help pay for further development and innovations that bring costs down for wider markets.
This Motley Fool article looks at SpaceX as a for-profit business: “How Does SpaceX Make Money?,” (June 25, 2016). This Space.com article, “Blue Origin’s Sweet Spot: An Untapped Suborbital Market for Private Spaceflight,” (August 12, 2016) reports:
A central objective of the company is creating a commercial suborbital space tourism vehicle for paying customers. But Blue Origin also plans to make money by taking science experiments into the final frontier.
Critics complain that much SpaceX income comes from federal funding (“Without NASA there would be no SpaceX and its brilliant boat landing,” (Ars Technica, April 11, 2016). But supporters of SpaceX, Blue Origin and other private space companies reply that NASA is fully federally funded and its launch and exploration costs are far, far higher (in part because they rely on traditional NASA/military contractors).
So, the debate over private vs. government space exploration tilts now toward private firms. This TEDx presentation by Jeff Greason, “Making Space Pay and Having Fun Doing It,” then of XCOR, outlines how commercial space development brings costs down.
The Chinese are heading to the moon as well, and Space.com reports on “China’s Lofty Space Ambitions Include 2018 Landing on Moon’s Far Side” (December 28, 2016):
China’s Information Office of the State Council on Tuesday (Dec. 27) released an expansive white paper on that country’s space activities in 2016. The document also projected a look at China’s space agenda over the coming years, a plan that includes a lunar sample-return mission and the first soft-landing on the far side of the moon in 2018.
And from 2015: “China unveils plan to land on mysterious far side of the moon” (Christian Science Monitor, July 21, 2015).
Back to potential U.S./China conflicts in space, The Diplomat article above reports on controversial 2015 U.S. legislation:
While many analysts believe the topic of space resources is far removed, there are at least two companies in the United States working on mining asteroids: Deep Space Industries (DSI) and Planetary Resources International (PRI). In 2015, Congress passed the U.S. Commercial Space Launch Competitiveness Act, which established a “first come, first serve” principle for property ownership in regard to space mining, and the United States has granted a license for Moon Express to accomplish the first commercial landing on the moon.
The U.S. law has been controversial worldwide. Since China is a growing power in space and an active member in formulating international space policy, its attitudes are perhaps of greatest importance in normalizing activity related to space resource utilization.
Mining and other operations on the moon may be a legal challenge as well as a technical and economic one. “Mining the Moon? Space Property Rights Still Unclear, Experts Say,” (Space.com, July 25, 2014):
But it’s unclear at the moment who is allowed to extract and profit from the moon’s resources, leading to a growing debate within scientific, entrepreneurial and policy circles — a debate made more lively and complicated by the changing landscape of stakeholders in space.
Lunar exploration is no longer the domain of governmental agencies alone. With activities like the Google Lunar X Prize and private-public partnerships stimulating a “New Space” industry, commercial organizations have business plans and are attracting investment to develop low-cost, regular, reliable access to the moon within a decade…
See also, “Moon Mining Idea Digs Up Lunar Legal Issues,” (Space.com, January 13, 2011)
More on Google’s Lunar X Prize here: “Google Lunar X Prize: The Private Moon Race Teams (Images).”
Also opening possible paths to the moon is the nonprofit Waypaver Foundation:
WayPaver is a catalyst for possibility. Through our efforts to eliminate roadblocks to Lunar Settlement we generate momentum for sustainability on Earth, the moon, and progress in further space development.
Waypaver’s lunar settlement page is here.
For the March/April 2017 Lincoln-Douglas Debate: “Resolved: The United States ought to guarantee the right to housing,” students enter the value side of a century old debate on policies to provide access to safe and affordable housing.
Students searching for “a right to housing” quickly find supporting articles and books, such as: “The Case for a Right to Housing,” “A Right to Housing: Foundation for a New Social Agenda,” “Housing as a Human Right – National Low Income Housing Coalition,” “The Right to Adequate Housing” and many others.
The “right” has been written into several international standards documents and covenants and is widely supported by human rights groups.”
[Then quoting Alexander:] The human right to housing, embodied in several international treaties, declarations, and constitutions, establishes that every person has a right to adequate housing and to the continuous improvement of living conditions.
After quoting the 1949 Housing Act goal of “the implementation as soon as feasible of a decent home and a suitable living environment for every American family,” Everyday Debate asserts:
However, to date, the goal has never been met since there has been no serious effort by the federal government to provide the needed resources.
It’s not clear what a “serious effort” would look like, but the federal government has spent hundreds of billions of dollars providing low-income housing and billions more have been spent by state and local governments for housing projects and subsidies. Affirmative debaters can advocate housing rights and for far more to be spent. Mixes with city, state, and federal housing programs are the efforts NGOs (non-government agencies) like Habitat for Humanity and many other local, state, and national nonprofits. More on NGOs and private housing below.
Students find claims that governments are not doing enough for [food safety, housing, education, child care, health care, etc.] and claims by conservatives and libertarians that government is doing too much. Across the political spectrum critics insist housing policy and programs need reform.
Public Choice economists make a separate case that government programs are often subverted or “captured” by corporations and other organized interest groups. The history of housing for the poor in the U.S. illustrates the many ways local, state, and federal policies and regulations protect established interests (Section 8 landlords, housing developers, current homeowners, and some NGOs and housing agencies).
To the question of federal spending on housing for the poor, according to the Budget of the U.S. Government, Fiscal Year 2017, Analytical Perspectives (quoted by Howard Husock of the Manhattan Institute):
Federal housing subsidies… In 2016, the federal government spent $30 billion on rental subsidies for low-income households and almost $6 billion on public housing. (Washington: Government Printing Office, 2016), Table 29-1.
USGovernmentSpending.com has page on total federal welfare spending, with housing expenditures in red in the chart at right, explaining:
There are three major welfare programs: relief (or income security), housing rent subsidies, and unemployment benefits.
The US Government Spending site also offers downloads of year-by-year federal housing expenditures, shown in table here for 2000 to
2017 (in billions of dollars). This is not a claim the federal government “already spends enough” or that current programs already address “a right to housing.” And obviously federal spending on housing subsidies is a lot less than spent in 2016 on national defense ($522 billion or $598 billion).
Students can dive into debates on local, state, and federal housing programs ranging from fraud and cronyism claims for Section 8 housing to stories of local misdeeds in diverting affordable housing funds.
Three housing stories some a range of housing issues: Philadelphia: “Affordable-housing dreams become Section 8 nightmares” (July 8, 2016), Texas/nationwide: “How Housing Policy Is Failing America’s Poor: Section 8 was intended to help people escape poverty, but instead it’s trapping them in it,” and Seattle: “Anatomy of a Swindle: How a Rogue Non-profit Captured the Emerald City,” (September 13, 2016).
The notes and links above on housing policy history and spending may seem more for policy debate than LD value debaters. Students can research positive and negative rights, and the views of natural law classical liberals that “life, liberty, and the pursuit of happiness” are negative rights. By negative they mean right to life and liberty should not be interfered with by others.
Every claimed right creates an obligation on the part of others not to interfere to restrict rights. A right to swing your arms freely is limited by your neighbor’s nose, and your neighbor’s right to not be hit in the nose limits your freedom of movement.
A natural right to housing would prevent others from interfering with our right to housing, and as a negative right would protect building, rent, boarding, or share a house, apartment, or room. A negative housing right would protect from neighbors or governments unjustly interfering with housing choices (though also would restrict new housing where it imposed unjust burdens on neighbors).
A positive rights claim for housing, on the other hand, creates an obligation on the part of others or government to provide housing. Negative rights claims insist others leave us alone to build, rent, or share housing as we please, but a positive rights claim call upon others to provide housing. This would create a positive obligation on the part of others or government to build, rent, or provide housing.
For much more on positive and negative rights claims for value debaters see the online collection Liberalism, Values and Lincoln-Douglas Debate, (pdf: liberalvaluesld), from “The LD/Extemp Monthly” and later debate newsletters.
We know this because of remarkable success in other major cities. The best example is probably Houston (with Harris and Fort Bend counties), where a determined mayor, Annise Parker, built a public-private campaign that has rescued 77 percent of the region’s unsheltered homeless population, reducing their numbers from 5,194 in 2007 to 1,186 as of last January.
Houston’s unsheltered homeless population is down about 75 percent since 2011, and leaders there credit their new housing-first approach.
The Atlanta Housing Authority uses even stronger language to explain its work requirement for the nondisabled: “AHA continues to believe strongly in the value, dignity, and economic independence that work provides.” In some Atlanta developments, employment rates (or enrollment in education or training) run as high as 94 percent. The Abt report also found that 20 of 34 MTW [Moving To Work] authorities are moving to change rent rules that require tenants to pay 30 percent of their incomes in rent—implying a rent increase of 30 cents for every additional dollar earned and providing an unintended incentive to move to the underground or even criminal economy.
In 2005, Utah set out to fix a problem that’s often thought of as unfixable: chronic homelessness. The state had almost two thousand chronically homeless people. Most of them had mental-health or substance-abuse issues, or both. At the time, the standard approach was to try to make homeless people “housing ready”: first, you got people into shelters or halfway houses and put them into treatment; only when they made progress could they get a chance at permanent housing. Utah, though, embraced a different strategy, called Housing First: it started by just giving the homeless homes.