Escalation in Hong Kong

You may have missed it with the fixation of the media on impeachment but the situation in Hong Kong between the people of Hong Kong and the Chinese authorities is continuing to escalate. The Wall Street Journal reports:

For the first time during the four months of unrest, uniformed soldiers from the Hong Kong garrison of the People’s Liberation Army raised a yellow warning flag at nearby protesters, saying: “You are in breach of the law. You may be prosecuted.”

Tens of thousands poured into the streets Sunday, many wearing masks in defiance of a ban on them introduced Saturday under the emergency law. There were scenes of anarchy as some protesters set fires, smashed Chinese banks and subway stations, while police, outnumbered at many locations, fired volleys of tear gas and projectiles. A taxi driver was beaten bloody by a mob in another district after he rammed into a group of protesters.

Chief Executive Carrie Lam invoked the colonial-era law Friday to ban masks at public gatherings, saying it was necessary to deter protesters who posed a serious danger to Hong Kong. The full emergency law, however, gives her government sweeping powers that include allowing authorities to impose curfews, extend detentions, censor the internet and take control of all transport—moves her government has been reluctant to impose.

“I would expect to see such power to be invoked soon, if the masks ban does not stop the protests,” Steve Tsang, director of the School of Oriental and African Studies China Institute at the University of London. “There is now a sufficiently strongly motivated group among the protestors to fight whatever the government does to end the protests, so I see an escalation.”

If the wider application of those powers fails, Mr. Tsang said, the next step would be the deployment of China’s People’s Armed Police—a paramilitary force used across the mainland border for domestic security.

I’m actually surprised that deployment did not take place this week.

I emphatically reject the idea that the U. S. should take any actions the Chinese authorities would construe as material support of the demonstrators. The demonstrators have enough trouble as it is without our building a case that they’re treasonous.

Sadly, we won’t take the action we should—mobilizing our allies and trading partners to stop doing business with China. Let China return to its autarky. That’s where it’s headed anyway. The entire world except for China will be the better for it. Certainly no one can reasonably believe that economic dealings with China will necessarily lead to political liberalization in China and without that a growing China is a threat to its neighbors, the United States, and the whole world.

Yesterday I read an article that blamed George W. Bush for China’s abuse of its international agreements and there’s a kernel of truth there. He was blithely unconcerned when China violated the agreements into which it entered when it was admitted to the World Trade Organization. But it wasn’t just Bush. It was every president since Nixon and after Bush except, perhaps, Trump.

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Decorum

Maybe I’m wrong here but, if President Trump is impeached by the House Democrats along what are essentially straight party lines on the basis of a failure of decorum, isn’t their best strategy to have their own conduct comport with the rules of decorum meticulously?

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The Awful Truth

At Atlantic Derek Thompson writes about the awful truth that neither Democrats nor Republicans want to talk about: good things can happen in a Donald Trump presidency. Let’s turn to his conclusion first:

Democrats don’t want to talk about low-income wage growth, because it feels too close to saying, “Good things can happen while Trump is president”; and Republicans don’t want to talk about the reason behind it, because it’s dangerously close to saying, “Our singular fixation with corporate-tax rates is foolish and Keynes was right.”

But good things can happen while Trump is president, and Keynes was right. “Tighter labor markets sure are good for workers who work in low-wage industries,” Bunker told me. “This recovery has not been spectacular. But if we let the labor market get stronger for a long time, you will see these results.”

and then to the meat of the article:

So, let’s play a game of wish-casting.

  • Imagine a world where wage growth was truly stagnant only for workers in high-wage industries, such as medicine and consulting.
  • Imagine a labor market where earnings growth for low-wage workers, such as those who work in retail and restaurants, had doubled in the past five years.
  • Imagine an economy where wages for the poorest Americans were rising twice as fast as hourly earnings for high-wage earners.

It turns out that all three of those things are happening right now.

I’m skeptical that Keynes has anything to do with it. What Keynes wrote was that a shortfall in aggregate demand can be countered by government spending by issuing credit. There is presently no shortfall in aggregate demand.

But two factors do have something to do with it. The first, as I have been saying for years, is a tighter labor market. There are only three sources for low-wage workers:

  • Turn high-wage workers into low-wage workers. We have been doing that for thirty years with our self-destructive trade policy.
  • New workers without experience or marketable skills come into the work force endogenously. They’re born and then mal-educated. We’ve been doing that for decades, too. In Los Angeles a quarter of all students fail to gradate on time. The same is true in New York City. It’s the same in Chicago.
  • Immigration, particularly illegal immigration.

Regardless of who is president in 2020 or 2021, we need to keep doing the things we’re doing now to tighten the labor market. To do otherwise is unconscionable.

The other factor is the cut in the corporate tax rate. Polling information from the National Federation of Independent Businesses show that small business owners, despite having to offer higher wage to attract workers, are willing to carry on because of lower corporate taxes.

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Critical Shortage

The editors of the Chicago Tribune point out a critical shortage:

Chicago teachers want better pay and working conditions. Mayor Lori Lightfoot has made a generous contract offer, yet the Chicago Teachers Union is threatening to strike. That’s but one sequence of current events in this city’s, this state’s, long-running series of public finance crises. What’s the fuller picture? Well, go back decades to when politicians in Chicago and Springfield began skimping on payments to government retirement systems.

Illinois suffers many of these fiscal catastrophes — in its school districts, cities, townships, counties and of course state government. Yet there’s only one set of taxpayers to address the layers of distress — the people who live here now.

Yes, there’s a critical shortage of Illinois and Chicago taxpayers. There is no shortage of ideas for spending more money, for the wants of public employees, or for Springfield’s demands that present taxpayers make up for the fecklessness of past lawmakers.

The rich are being driven from Illinois and Chicago by high taxes and the prospect of even higher taxes in the “Pritzker tax”, the poor by high crime and school closings in their neighborhoods, and the middle class by the highest property taxes in the nation.

Former Chicago Mayor Rahm Emanuel had an effective by cynical strategy: drive the poor from the city while attracting the rich by adding amenities for them. Besides its cynicism it only suffered from one flaw: why come to Chicago when you could go to San Francisco, San Jose, Raleigh, or Miami instead?

The editors conclude with their alternative proposal:

The best way to rescue Illinois governments from themselves is to curb public pension benefits earned in the future. That also requires amending the Illinois Constitution. Giving voters a voice on that amendment — not just on the Pritzker Tax — will help state and local governments survive. So will affordable labor contracts. Mayor Lightfoot’s negotiations with Chicago teachers are part of the mix.

Because there’s only one set of taxpayers in Illinois.

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Why Republicans Will Hold the Senate

At Larry Sabato’s Crystal Ball Kyle Kondik explains why the Republicans are likely to maintain their control of the Senate following the 2020 elections:

We would be lying if we said we had a great sense as to how the Democrats’ drive to impeach Trump will impact the elections next year. There are just too many variables and moving pieces to feel strongly about it. But the potential for the battle to harden partisan attitudes may have down-ballot effects for some members of Congress, as noted above.

But don’t be surprised if, for all the noise, the impeachment inquiry — and even a successful House vote for impeachment and subsequent Senate trial — does not lead to sharp changes in public attitudes. It is true from limited polling that, at the very least, Democrats are coalescing around impeachment after the revelation of the now-famous telephone readout between Trump and the Ukrainian president. What seems to be happening is that Democrats are taking their cues from party leadership, which has resisted calling for impeachment until now, and increasing their own support for impeachment as a result. There has been some movement in favor of impeachment among independents and Republicans, although one would have to cherry-pick data to argue that overall support for impeaching and removing the president is significantly more than mixed.

Meanwhile, the president’s approval rating — as it seems to do — has remained largely fixed where it’s been, in the low-to-mid 40s, with disapproval over 50%. Could the Ukraine bombshell and subsequent discoveries from the impeachment process cause it to dip over time? Sure.

But after years of observing the president’s durability in polls, thanks in large part to strong GOP support, it’s safer to expect continuity as opposed to change in the president’s standing.

Read the whole thing. The map is on the Republicans’ side.

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Conspiracy Mania

Throughout history there have been episodes in which groups of people have suddenly been overcome by irresistible urges. There were, for example, the dancing mania of Germany in the 14th century and the laughing mania in the 1960s in which schoolgirls were overwhelmed by uncontrollable laughter followed by anxiety that lasted for weeks on end.

There have also been crazes like the Tulip craze of the 16th century, six day bicycle races, the radium craze of the early 20th century, and the fad of starting utopian communities in the 19th century.

Today we seem to be in the midst of our very own mania and it involves conspiracies everywhere. A conspiracy is when two or more people plan in secret to do something, usually something illegal or harmful. When the conspiracy exists, it’s a crime or at least a scandal. When it doesn’t exist, it’s a conspiracy theory. We seem to have a bumper crop of both today. I’m no longer sure how one would go about distinguishing a conspiracy that hasn’t been uncovered yet from a conspiracy theory.

Is Trump’s collusion with Russia a conspiracy by Trump, a conspiracy theory, or a hoax? Was there, has there been, or is there a conspiracy to keep Bernie Sanders from becoming the Democratic Party’s candidate for president? Was Barack Obama born in the United States? Jeffrey Epstein’s suicide? Anti-vaccination?

Some blame Donald Trump. I blame the Internet and the generally lamentable state of education..

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Transcripts

Quoting a transcript of Rep. Adam Schiff’s interrogation of Acting DNI Joseph Maquire highlights the editors of the Wall Street Journal’s concern about the “impeachment inquiry” proceedings:

Last week’s inquisition of acting director of national intelligence Joseph Maguire by House Intelligence Chairman Adam Schiff captures the prevailing disdain for the separation of powers when Mr. Trump is the political target. Mr. Maguire, who has an impeccable reputation, had received the whistleblower complaint as part of his duties. He then acted responsibly by seeking legal advice about whether the document was subject to executive privilege.

Mr. Schiff berated him for even waiting to turn the document over to Congress: “At any time over the last month that you held this complaint, did the White House assert executive privilege?”

Mr. Maguire: “Mr. Chairman, I have endeavored—”

Mr. Schiff: “I think that’s a yes or no question. Did they ever assert executive privilege?”

Amid more browbeating, Mr. Maguire explained that the White House went through a “deliberate process” and “it did appear that [the complaint] has executive privilege. . . . It is the White House that determines that. I cannot determine that as the director of national intelligence.”

Mr. Schiff: “But in this case the White House, the President is the subject of the complaint. He’s the subject of the wrongdoing.” . . .

Mr. Maguire: “I was endeavoring to get the information to you, Mr. Chairman, but I could not forward it as a member of the executive branch without executive privileges being addressed.” . . .

Mr. Schiff: “Well, corruption is not the business, or it shouldn’t be, of the White House or anyone in it.”

Mr. Maguire: “No, but what the White House decides to do with their privileged communications and information, I believe is the business of the White House.”

Mr. Schiff: “Do you believe that’s true even if that communication involves crime or fraud?”

According to the Justice Department’s analysis of the whistleblower’s complaint, there was no “crime or fraud.” But Mr. Schiff treats the whistleblower’s complaint as enough to override any claim of a President’s right to have confidential communications with foreign leaders.

The implication is that any time anyone in the bureaucracy issues a complaint against a President, Congress has the power to demand it be delivered and made public. That is already happening with the stories about Mr. Morrison. This means that no foreign leader can have the expectation that anything he tells Mr. Trump, or the next President, will be confidential.

Let’s put it another way. Is the expectation that every telephone call with a foreign head of state is to have operatives of the opposition party listening in?

I’ve long had concerns about how we go about conducting private diplomacy in an open society but this sounds more like an argument for a return to the spoils system to me.

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Emanuel and Rove

In an op-ed at the Washington Post former Chicago Mayor Rahm Emanuel, probably the savviest political tactician around these days, summarizes the situation for Democrats aptly:

What we are about to witness is a balancing act for both parties: Pelosi needs to move the process expeditiously — but the process needs to be seen as fair, not just fast. The charges must be clear, and the evidence needs to prove beyond any doubt that any proposed punishment fits the severity of the crime. Democrats will do themselves no favors if they fail to hold the president accountable; but they should be wary of overstepping as well. Republicans may fear conservative voters will punish them for criticizing Trump. But the GOP could lose everything if their party is seen to be marching in lockstep with a president who violated his oath.

Pelosi has never been keen to explain her strategy in public; you don’t get to be speaker by oversharing. But because this is an impeachment inquiry — not an actual impeachment — the key for Democrats at this stage will be to focus their efforts on fact-finding, not yet making a case for conviction. Particularly in these early days, our posture needs to be about bringing sunlight to a murky reality, not convincing the public that it should support any given outcome. Over time, more facts will come out. And when they do, they could lead investigators in any number of directions.

If by mid-November, the evidence makes a clear case that Trump has used the power of his office to coerce a foreign government and advance his electoral interests, impeachment will undoubtedly be in order. In the unlikely scenario that this is all smoke and no fire, Congress would be wise to set the matter aside. But if investigators determine that the president should be admonished without being evicted from the White House, the House has a third option at its disposal: The House can sanction and censure the president, as the Senate did President Andrew Jackson nearly 200 years ago.

In his corresponding op-ed at the Wall Street Journal Karl Rove, no slouch as a tactician himself, emphasizes Emanuel’s point:

They are moving much too quickly. Democrats toss around the word “urgent” as if speed is the prime imperative—more important than finding the truth or following procedure. After explaining that events “accelerated the pace” for beginning impeachment, Mrs. Pelosi told reporters, “We have to strike while the iron is hot,” repeating the phrase for emphasis. That means House Democrats will likely hold hearings for a few weeks once they return in mid-October, and aim for a floor vote on articles of impeachment by year’s end.

The Democrats’ need for speed has already resulted in unfairness. Consider Friday’s demand by three committee chairmen— Elijah Cummings, Eliot Engel and Adam Schiff—that Secretary of State Mike Pompeo provide documents and depositions from five State Department officials starting Oct. 2.

Mr. Pompeo pushed back, arguing that two business days wasn’t enough time for those called to consult private and department lawyers and prepare to answer questions under oath, let alone for the State Department to review the requested documents to decide whether they are privileged or classified, or whether to cooperate at all.

In response, the chairmen threatened Mr. Pompeo, saying delay “is illegal and will constitute evidence of obstruction of the impeachment inquiry.” They’re bluffing, but this is how they operate. Verdict first, trial later. Break the rules. Ignore due process. And fairness be damned.

Adam Schiff is likely to prove counter-productive if Democrats’ strategy is to position themselves initially as neutral fact-finders. An effort coordinated among House Democrats and Washington bureaucrats sounds suspiciously like the “Deep State” some have been fulminating about.

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Least “Tax-Friendly”

I presume it will not surprise you that Kiplinger has rated Illinois the least tax-friendly state in the nation. Marketwatch reports:

This week, the personal-finance publication Kiplinger’s released its list of the most — and least — tax-friendly states in America. To draw its conclusions, it used a hypothetical couple with two kids and $150,000 in income a year plus $10,000 in dividend income, and then looked at the income-, property- and sales-tax burden that family would face.

Illinois took the No. 1 spot on the list, thanks in large part to its high property taxes. The Land of Lincoln was followed by Connecticut and New York, both of which have pretty high-income taxes.

Illinois has no equivalent to California’s Prop. 13. Homes are reassessed triennially and there is no limit on the amount of tax relative to the value of the property. Property taxes in Illinois have reached confiscatory levels. Property taxes are taxes on middle class wealth: by and large the poor don’t own their own homes (although high property taxes are reflected in their rents) and the rich hold most of their wealth in something other than their homes. Not only are they regressive they are particularly unjust, taxing people on incomes they have not received.

Naturally, our newly-elected governor wants to make Illinois more attractive by imposing a graduated income tax.

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Twin Predictions

I was saddened to hear that Sen. Bernie Sanders had needed to have heart surgery. I wish him all the best.

Attendant to that I will make a pair of predictions. First, the DNC will redouble its efforts to have Sen. Sanders withdraw his candidacy and throw his support to some other candidate, presumably Elizabeth Warren. And second he will refuse. He will continue to fight to the bitter end.

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