Assessing NAFTA

I urge you to read Dani Rodrik’s excellent analysis of the impact of NAFTA. Rather than trying to except it (I encourage you to read it in full), I’ll try to summarize it:

  • The welfare gain to the U. S. of NAFTA was .08% (yes, eight hundreds of a percent, eight parts in 10,000)
  • Much of the gains were not efficiency gains but a benefit to terms-of-trade improvement, i.e. income transfers from Canada or Mexico
  • The localized harm in the United States was quite severe

My conclusions from that are that justice demands that, when enacting these multi-lateral “free trade” agreements, much, much more attention be paid to keeping those injured by the deal whole and that doing that will not pay for itself.

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AG Asks Judge to Enjoin State from Spending Unappropriated Money

I suspect that I ought to take notice of the latest development in the slow-moving MVA that is the great State of Illinois. Reuters reports that Illinois Attorney General Lisa Madigan (coincidentally the daughter of House Speaker Mike Madigan) has filed a motion to request that a judge lift a motion requiring that state employees continue to be paid, even in the absence of a budget authorizing the disbursement:

The attorney general of Illinois asked a judge on Thursday to lift an order requiring state workers to be paid during the state’s record 19-month budget impasse in hopes of putting pressure on lawmakers to pass a spending plan.

Attorney General Lisa Madigan, a Democrat, filed a motion in St. Clair County Circuit Court, requesting Judge Robert LeChien to dissolve his July 2015 order that authorized the state comptroller to pay wages of all Illinois employees despite the state not having a budget in place, court documents showed.

The order has “removed much of the urgency for the legislature and the governor to act on a budget,” Madigan said in a statement.

Since taking office in 2015, Republican Governor Bruce Rauner has feuded with the Democratic-led state legislature, leaving Illinois as the only U.S. state to go 19 months without a complete budget.

A bill package aimed at ending Illinois’ record-setting budget impasse and addressing the state’s deep fiscal woes will not be voted on in the Senate until the second week of February, the chamber’s leaders said on Thursday.

Note that the judge made his decision a year and a half ago, presumably under the misapprehension that the governor and legislature would do their jobs.

There’s been quite a bit of recrimination over AG Madigan’s motion. CapitolFax.com reproduces this letter from AFCSME Executive Director Roberta Lynch:

Dear [redacted],

Last night AFSCME’s attorney received official notification that Illinois Attorney General Lisa Madigan filed a motion yesterday in St. Clair County Circuit Court to dissolve the preliminary injunction that AFSCME secured nearly two years ago to ensure that state employees would continue to be paid despite the state’s budget standoff.

I want you to know that AFSCME is prepared to return to court in opposition to the Attorney General’s motion and to pursue every available legal means to halt her action. Other unions representing state employees were our partners in securing the original injunction and I’m confident they will stand with us now.

The Attorney General is justifying her action by citing the urgent need for a resolution of the state budget stalemate.

Of course, we all agree that such a resolution is long overdue. That’s why AFSCME has repeatedly called on Governor Rauner to end his insistence that enactment of a state budget must be tied to his personal political agenda which is aimed at weakening workers’ rights.

However, the need for a budget resolution can in no way justify the Attorney General’s harmful and irresponsible legal maneuver.

AG Madigan’s action is particularly objectionable coming as it does at a time when Governor Rauner has already been waging a relentless assault on state employees—seeking to impose his own contract terms that would drastically drive down employees’ incomes and weaken rights on the job.

Our union has said repeatedly that we do not want to see a shutdown of state government. We have done everything possible to avert a strike. But we are determined to resist the governor’s efforts to impose his terms—which would set us back for many years to come.

That’s why it is more critical than ever that union members vote “YES” to give your Bargaining Committee the authorization to call a strike if that becomes the only recourse to gain fair treatment and respect.

Today Governor Rauner will be claiming that he is a friend of state employees and wants to make sure you get paid. We know well what a bunch of baloney that is. After nearly two years of unremitting hostility toward state employees—doing everything possible to inflict damage to our working conditions and our economic security, there’s no way Bruce Rauner has decided to be our buddy now. Rather, his phony sympathy is nothing but an effort to protect his own position in the state budget battle.

You and your fellow state employees are on the job every day providing vital services that Illinois citizens depend on—often under difficult, even dangerous, conditions. It is deeply disturbing when it appears that our state’s political leaders see you as no more than pawns in their games—failing to respect or value the vital work that you do.

But we won’t be discouraged or beaten down. We have won so many battles standing together and fighting back—and we can win this one too!

In Unity,

Roberta Lynch
Executive Director

Echoing Talleyrand’s (or Metternich’s) remark on hearing of the death of the Turkish ambassador, I wonder what AG Madigan means by this motion? Is it her way of announcing she will not be a candidate for governor in 2018? Is it the result of a family spat? Does she think that her dad and the governor should grow up fercrissakes?

Everyone knows what should be done. Speaker Madigan should give a little; Governor Rauner should give a little; they should join hands and enact a budget. Instead they seem intent on glaring eyeball to eyeball at each other until 2018 (or Speaker Madigan’s and/or the state legislature’s approval rating drops to zero—both are in the teens now).

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Slow Growth and No Growth

Real gross domestic product in the United States in 2016 grew at the rate of 1.6%. From CNNMoney:

The U.S. economy grew at an annual rate of 1.6% in 2016, the Commerce Department reported Friday.

In the last three months of the year — between October and December — the economy grew at an annual rate of 1.9%. It’s the slowest pace of growth since 2011.

It reflects how slow the recovery has been for many Americans since the Great Recession, which ended in 2009.

Weak economic growth was a key reason behind President Trump’s election. He promises to get growth up to 4% a year, something that hasn’t happened since the late 1990s.

Trump’s agenda to cut corporate and individual taxes, build more roads and bridges and cut away regulations have some optimistic that he can boost growth — how much, is anyone’s guess.

So, growth below 2% and decelerating. Another problem that goes unmentioned: economic growth isn’t distributed across the country or across the economy. In fact almost eight years later 90% of counties have not fully recovered from the Great Recession.

That throws a monkey wrench into all sorts of things from the actuarial soundness of public employee pension plans to cost of living increases for seniors.

We need more growth, in more parts of the country, in more sectors of the economy with the benefits going to more people. I am extremely skeptical that the approaches that President Trump apparently prefers will produce the results he thinks they will.

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The Effect of Non-Citizen Voting

I found an interesting piece on the effects of non-citizen voting on the popular vote totals from Jesse Richman of Old Dominion University. Essentially, based on his research:

  1. Large numbers of fraudulent votes by non-citizens are likely to have been cast in the 2016 general election.
  2. Voting by non-citizens cannot account for all of Sec. Clinton’s popular vote plurality.
  3. It could have increased her electoral vote total.

or, said another way, President Trump’s claims are poppycock but that doesn’t mean that we don’t have a problem.

Here’s the meat of his observations:

Is it plausible that non-citizen votes added to Clinton’s margin. Yes. Is it plausible that non-citizen votes account for the entire nation-wide popular vote margin held by Clinton? Not at all.

If the percentage of non-citizens voting for Clinton is held constant, roughly 18.5 percent of non-citizens would have had to vote for their votes to have made up the entire Clinton popular vote margin. I don’t think that this rate is at all plausible. Even if we assume that 90 percent voted for Clinton and only 10 percent for Trump, a more than fourteen percent turnout would be necessary to account for Clinton’s popular vote margin. This is much higher than the estimates we offered. Again, it seems too high to be plausible.

Some will find that heartening, some dismaying, some both. So large a number of votes cast illegally by non-citizens easily sway certain close elections, particularly at the local level.

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When You Get to the Fork in the Road

At the Chicago Tribune, John Kass suggests that Democrats might want to support a Scalia-like nominee to the Supreme Court as the best case scenario:

If Democrats are serious with all their caterwauling and shrieking about Trump, if they are truly worried about a chief executive running amok, there’s one thing they must do:

Support Trump’s nomination of a conservative candidate for the Supreme Court in the mold of the late, great Supreme Court Justice Antonin Scalia.

If not, then all the Democratic hair-on-fire theatrics, all the handwringing about Trump and “alternative facts” when they were silent about Obama administration falsehoods — it all tells Americans a story.

It tells Americans that Democrats aren’t remotely serious, and that all the left is really doing is screaming about lost power.

I actually think that a purely obstructionist stance on the part of the Democrats would be worse than that. I think we’re on the brink. Rather than inducing people to turn to the Democrats to save them embracing a radical “the worse, the better” strategy could be the last straw.

An obstructionist strategy hasn’t worked in Illinois. Gov. Bruce Rauner’s approval rating is low but House Speaker Mike Madigan’s and General Assembly’s approval ratings are even lower.

It would be far better to support what you can and oppose what you must.

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Just Because Something is Desireable Does Not Make it Possible

Ana Quintana’s piece at RealClearWorld on building a strong relationship with Mexico starts out well enough:

The new president’s ambitious “America First” strategy means that Donald Trump intends to act in the best interests of the United States. Our friends and allies should find this course reassuring rather than threatening.

Few things are more important than having friendly, prosperous and secure neighbors on both sides of the border. The first scheduled meeting between Trump and Mexican President Enrique Peña Nieto’s has now been postponed. But when the two leaders finally do get together they will have lots to talk about, with pressing issues including trade, border security, and immigration.

but I found it pretty unsatisfying, focusing, as it does, on why we should want a strong relationship with Mexico rather than whether we can have a strong relationship with Mexico.

Is it possible to have a strong relationship with a weak country? Mexico has many, many problems many of which are exacerbated by the United States with the rest being tolerated by the United States.

What would a strong relationship between the two countries look like? A Mexico that does everything the United States wants? A United States that looks the other way at Mexico’s passive aggressive attitude and manifest social problems? Neither of those seems to fit the bill to me.

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The U. S. Is Not a Nation-State

To be a nation-state a country must be relatively homogeneous. The U. S. is not homogeneous enough to be a nation-state and we never will be. We have never been a nation-state.

Speaking of a “return of the nation-state” in discussing the United States is claptrap.

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What Should the U. S. Relationship With Mexico Be?

I have no opinion about President Trump’s spitting contest with Mexico’s president. I’ve had a low opinion of the U. S. relationship with Mexico all of my adult life. I think we’re simultaneously too patronizing and too dismissive of Mexico.

The U. S. preference for weak neighbors has implications and we’re seeing those play out in Mexico right now.

What should the relationship between the United States and Mexico be like and how would your preferences work out in practice?

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They Ain’t What They Used to Be

At the New York Times researcher Zeynep Tufekci makes an interesting point: social media make large demonstrations much easier to organize than used to be the case. That in turn suggests that large demonstrations are not particularly good indicators of a movement’s strength and furthermore comparisons with past demonstrations are unreliable:

After studying protests over the last two decades, I have to deliver some bad news: In the digital age, the size of a protest is no longer a reliable indicator of a movement’s strength. Comparisons to the number of people in previous marches are especially misleading.

A protest does not have power just because many people get together in one place. Rather, a protest has power insofar as it signals the underlying capacity of the forces it represents.

Consider an analogy from the natural world: A gazelle will sometimes jump high in the air while grazing, apparently to no end — but it is actually signaling strength. “If I can jump this high,” it communicates to would-be predators, “I can also run very fast. Don’t bother with the chase.”

Protesters are saying, in effect, “If we can pull this off, imagine what else we can do.”

But it is much easier to pull off a large protest than it used to be. In the past, a big demonstration required months, if not years, of preparation. The planning for the March on Washington in August 1963, for example, started nine months earlier, in December 1962. The march drew a quarter of a million people, but it represented much more effort, commitment and preparation than would a protest of similar size today. Without Facebook, without Twitter, without email, without cellphones, without crowdfunding, the ability to organize such a march was a fair proxy for the strength and sophistication of the civil rights movement.

I’ve never thought particularly highly of demonstrations. They’re certainly no substitute for political organization. Maybe they’re useful in terms of blowing off steam but if your objective is to promote change you’ll need more than demonstrations.

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About the BLS’s UE Data…

Since we had discussed some of the issues with the Bureau of Labor Statistics’s employment situation reports, I thought this report was worth mentioning. At the New York Post John Crudele reports about some fraud on the part of Census Bureau employees who take the surveys used by the BLS in their report:

Let’s look at the one case that set Butler [Ed.: a whistleblower working with Crudele] off — the cheating done by Buckmon, who is now deceased.

Buckmon would complete more than 100 cases in 10 days — more than three times his peers.

It turns out that Buckmon wasn’t actually surveying people. He was making up data and collecting overtime to account for the time it would have taken to get those interviews.

And this one man alone was cheating on such a large scale that it could affect the national jobless numbers since the bureau’s Current Population Survey is scientifically weighted and each response counts as 5,000 households.

So Buckmon’s 100 cases equaled 500,000 households — and he wasn’t the only one caught faking data, Butler said.

The individual BLS employment situation reports don’t stand alone. Each ESR is dependent on those taken before. One bad survey means that those after it are questionable, maybe by just a little bit, maybe by a lot—keep in mind that the actual changes that we have been seeing have been relatively small. Lots of surveys being fraudulent calls the entire report into question. And with a sample size of 100 for a population of 500,000 the margin of error is already greater than 5% with a confidence level of 95%, suggesting that the confidence level they’re going for is lower than that.

That the fraud introduced by that one individual wasn’t detected in a routine review of the data suggests to me that the entire process is lacking.

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