Here’s Mohammed El-Erian’s reaction at Bloomberg View to the November 2016 Bureau of Labor Statistics’s employment situation report:

Assessed in a macro-economic context, the seemingly competing signals point to structural headwinds to a comprehensively healthy U.S. labor market, including skill mismatches, technology displacement and insufficient social mobility. These help explain why the average household still feels unsettled and insecure despite an impressive eight years of job creation under President Barack Obama. And they point to the importance of complementing the pro-growth elements of President-elect Donald Trump’s agenda — with its appropriate emphasis on tax reform, deregulation and infrastructure — with policies aimed at modernizing education, reforming immigration and, encouraging better labor retooling and retraining, including through greater use of public-private partnerships.

He really sees a different world than I do. What I see is a slack labor market and a decline in the number of permanent full-time jobs in favor of temps. That’s basically just a strategy for pushing total compensation down, particularly when the temps are being imported from overseas.

Meanwhile, let’s consider a couple of questions:

• Will the Fed raise interest rates at its next meeting? I think it will.
• If it does, will inflation increase? I think it will.

I’d like to ask what is clearly a sensitive question. Do the French in France and the Germans in Germany have a right to their cultures? And to what lengths may they justifiably go to preserve them?

Even as staunch a defender of immigration and refugees as Francis has recently made statements implying that they do, warning that countries should accept no more immigrants or refugees than they can assimilate into their societies successfully. And that immigrants have a responsibility to adopt the languages, laws, and customs of their new countries. I think that Francis is probably on shaky ground with respect to populations that don’t distinguish between their religions and their languages, laws, and customs.

If they do, how large an immigrant population is the limit before there is social upheaval? I think that the evidence suggests around 15%.

Now an even more sensitive question. Do the people of the United States have such a right? While I think from a practical standpoint we should limit immigration to just about our present level, I think it’s at least arguable that we do not. Our society is significantly more syncretistic than that of France or Germany.

When I say “it’s at least arguable” I mean that I think there are legitimate arguments on both sides and I haven’t completely made up my mind. As suggested above I think we have reached our practical limit. As evidence I’d produce the Somalis who, a quarter century after their immigration here still have 25% unemployment. There are costs of assimilation both to host countries and immigrants that rise depending upon the degree of similarity between the new immigrants and the pre-existing populations of the host countries.

So, for example, Germany could probably accept all of the Austrian immigrants who cared to move there without grave difficulty.

The Chicago Tribune reports that the number of homicides in Chicago in 2016 has topped 700:

In a year of relentless violence, Chicago has hit another grim milestone, exceeding 700 homicides for the first time in nearly two decades, according to official Police Department records.

The 700 mark was reached about 6:20 a.m. Wednesday when a 25-year-old man was shot in the abdomen and back as he drove, crashing into a bus shelter in the 9300 block of South Cottage Grove Avenue on the South Side, said Frank Giancamilli, a police spokesman.

According to the invaluable resource HeyJackass!, the total number of homicides in Chicago for November was 736. If present trends continue that means that more than 800 people will have been killed in Chicago in 2016, the most since 1995.

I don’t think we should take any solace in that 800 is lower than the 943 homicides in 1992 or the 970 in 1974. In 1992 Chicago’s population was 10% higher than it is now and in 1974 it was 20% higher than it is now. That means that the number of homicides per 100,000 population is very close to what it was in those record years.

The end of an op-ed is a very strange place to put your premises but that’s what James Capretta and Scott Gottlieb have done in their Wall Street Journal op-ed sketching their proposals for the requirements of a program to replace the Affordable Care Act:

American health care is teetering because it relies too much on governmental coercion. A functioning marketplace can deliver high-quality care at lower cost. Now is the time to secure a system that empowers consumers to take command of their health care.

Those are actually six different premises and I’m not sure I agree with any of them. To restate they’re saying that

1. The American healthcare system is teetering.
2. Excessive government coercion is causing it to teeter.
3. It is possible for the U. S. healthcare system to deliver high-quality care at lower cost.
4. That can be effected by introducing a functioning marketplace.
5. It is possible for ordinary Americans to “take command of their health care”.
6. That can be done now.

What does it mean to say that “American health care is teetering”? If they mean that the present rate of cost increase cannot be sustained indefinitely, I’d agree. Otherwise I think I disagree. It’s certainly an idiosyncratic use of the word “teetering”.

The American health care system has never been larger, made more money, or been more effective. If that is teetering, I’ll have some. The present system has several defects:

• Too many people receive inadequate care.
• Others are over-treated.
• Between 50% and 70% of the present system is funded via tax dollars.
• The rate at which costs are increasing exceeds the rate at which the non-healthcare GDP is increasing, tax revenues are increasing, or non-healthcare income are increasing.

That’s simultaneously unjust, unhealthy, and unsustainable. You can prove the unsustainability part yourself by drawing some graphs on a piece of paper. Just assume that healthcare costs are presently about a quarter of total spending and that they’re rising three times as fast as revenues.

If the system isn’t teetering, it cannot be the case that government coercion is causing it to teeter. Even if healthcare is teetering and by “government coercion” they mean the Affordable Care Act, I challenge them to prove the claim. I think there’s a much better case that the rate at which costs are increasing is inducing the problems in our healthcare system.

I’m also skeptical of the claim that high-quality care can be delivered at lower cost. I’m confident that a uniform level of care could be delivered at lower cost. Would that uniform level of care be high quality? Would it even be adequate? What does “high quality” mean? I think it’s a campaign slogan rather than practical program.

Let’s jump to the “functioning market” point. What does that mean? It smacks of “no true Scotsman”. There has never been a national health care market and the very notion is nonsensical. There are actually thousands of little health care markets, none of them completely market-driven.

For our healthcare system to be completely market-driven we’d need to abandon government subsidies for healthcare, occupational licensing, government approval of treatments, procedures, and drugs, malpractice as the standard of medical misbehavior, and patents, just to hit the high points. Can you imagine our doing all of those? Me, neither.

I’m familiar with the studies that have shown that people can lower their healthcare costs by economizing. I’ve never seen a study that shows the ordinary people can economize and maintain a reasonable standard of health. Indeed, the studies I’ve seen suggest that people are as likely to economize on necessary care as on excessive care.

Rather than people taking control of their own healthcare, I think we’re stuck with letting professionals control their patients’ healthcare. The total volume of knowledge is just growing too fast for any other alternative. Professionals have considerable difficulty in keeping up with it.

Once you’ve accepted that, the opportunities become much more limited.

This Washington Post article is just chock-full of beautiful maps of U. S. infrastructure—airports, bridges, railway, waterway, power grid. One of the maps, the map of the power grid, is reproduced above.

There are two things I find missing from most discussions of infrastructure needs and spending. The first is value. Yes, I know that the civil engineers’ professional organization has found that 10% of the 600,000 bridges in the United States are structurally deficient. I’ve read the report. There’s not a word in it of which of those 60,000 bridges are worth fixing or cost-benefit analysis of any kind.

The second is life expectancy. I’ve got an anecodate that illuminates this. Some years back when she was in her early 80s my mom had to buy a new water heater. The plumber tried to sell her a warranty, giving her a choice between a 10 year warranty, a 20 year warranty, and a lifetime warranty, at rising cost. She asked him “How long do you think I’m going to live?” She got the 10 year warranty. It was the right choice.

Is it really worthwhile for us to refurbish the rail lines that carry coal from Wyoming to Kansas City and from there to the power plants of the Midwest? Let’s say the refurbishment is expected to be good for 50 years and that we expect it to be useful for 20 years. Proponents want us to amortize the expense of the refurbishment over 50 years. Shouldn’t we be amortizing it over its useful life instead?

Will air travel be more or less practical twenty years from now than it is today? That’s the kind of assessment we should be using to prioritize infrastructure programs. Not whether the Admirals Clubs in Beijing are nicer than ours.

I want to commend to your attention an excellent exchange of ideas between Shikha Dalmia and George J. Borjas on immigration at Reason.com. Read the whole thing.

My own view is that the subject is enormously clouded, not merely by tinges of racism as pointed out in the exchange, but by the dichotomy between the immigrants whom we select and those who select themselves or are selected by other immigrants. I believe that we need to reform our immigration, both legal and illegal, so that it benefits more of the American people, not merely employers, the immigrants themselves, or previous immigrants.

Such reform will be extremely painful but is necessary and inevitable for economic, social, and security reasons.

What do you think about the deal announced with Carrier to keep 1,000 of the 2,000 jobs it had planned offshore in the state of Indiana? I don’t know enough about Carrier or the conditions in Indiana to make a judgment. I don’t think I’d want Illinois to cut such a deal but my general rule is that other states can do any blame fool thing they want to. It’s their business.

What amazes me is that this action is so poorly understood. As I see it Trump is doing a couple of things. First, he’s doing what smart CEOs do: he’s getting results immediately. He’s building a case that he’s a guy who gets things done and can be trusted to make good on his promises.

Second, he’s dominating the news cycle. They say that Oscar Wilde pointed out that you can judge the character of a man by his enemies and the news media have fully demonstrated that they are Mr. Trump’s enemies, casting themselves into disrepute while doing so by an utter disregard of ordinary journalistic standards. Another quote, this one attributed to P. T. Barnum: there’s no such thing as bad publicity.

And also importantly, Trump is changing the subject. He’s distracted the media from major issues (like his conflicts of interest) to minor ones like whether the state of Indiana should be offering subsidies to companies to keep their operations in-state.

Update

See Charlie Cook’s take on the matter at National Journal:

Put­ting aside the spe­cif­ics of this case, the mes­sage is that Trump will be seen by many as de­liv­er­ing on his loud prom­ises dur­ing the cam­paign that he was go­ing to save Amer­ic­an jobs—and he did so even be­fore he was sworn in­to of­fice.

His ac­tions raise an in­ter­est­ing ques­tion. When com­pan­ies con­duct cost-be­ne­fit ana­lyses of keep­ing fa­cil­it­ies in the United States versus shift­ing to lower-cost coun­tries, is there a polit­ic­al cost factored in­to that equa­tion? In re­cent years there have been plenty of pub­lic of­fi­cials of­fer­ing car­rots for at­tract­ing plants and com­pan­ies, but not a lot of wav­ing sticks warn­ing what might hap­pen if they shut fa­cil­it­ies down.

Is Don­ald Trump go­ing to start telling com­pan­ies: “If you keep or in­crease jobs here, you might be pleased with our policies that af­fect you in the fu­ture; if you shift them else­where, you might not be so happy with what we do, or don’t do for you.” No threats, just a subtle, “I’m watch­ing you.” The men­tal­ity for so long has been, “glob­al­iz­a­tion is good, don’t get in the way of glob­al­iz­a­tion” has come to mean that there are no con­sequences to shift­ing jobs abroad, that it was poor form for a pub­lic of­fi­cial to, in ef­fect, threaten a com­pany that ex­ports jobs. That may be what Trump is go­ing to do.

Buckle your seat belts, we’re in for a bumpy ride. Donald Trump may actually be a populist. That should be enough fright all but the most entrenched of elites.

At the New York Times they’re debating whether the federal government has the authority to compel state and local governments to enforce federal immigration law. You can read the pro and con positions if you care to.

My own view is that the federal government (meaning the executive branch of government) does not have the authority to compel city governments. The Congress could withhold funding from cities as motivation but it can’t just order them to do things.

State governments, however, have plenary authority over the cities incorporated under their statutes. State legislatures’ diktats could compel those cities to do their will. Governors could send the National Guard to arrest mayors and other city officials if they don’t comply and it probably wouldn’t even require a court order, although there may be some due process considerations.

However, I think the position of the sanctuary cities is foolish and self-destructive in part for the reasons outlined in the pro argument at the NYT—it’s an interference in ordinary inter-agency law enforcement. I also think that it undermines the legitimacy of government more generally.

Furthermore, I think that, if city governments believe that the interests of residents who don’t obey our laws override the interests of tax-paying citizens who do, they have much larger problems than the federal government.

At Berlin Policy Journal Ulrich Speck has what strikes me as a somewhat agitated post on prospective changes in the world order subsequent to the election of Donald Trump to the presidency of the United States:

Without American protection, Europe might not be able to uphold its own liberal order. The EU has built a unique system of cooperation and integration, but this has been achieved under the condition that most questions of strategy and hard power have been dominated by Washington. If the US umbrella vanishes and power and competition fully return to Europe, the EU might disintegrate into parts. A post-American Europe would probably be open to divide-and-rule strategies devised in Moscow and Beijing.

It’s difficult to predict just what path the Trump administration might choose. Regardless, European governments need to do two things: One is to invest in their own strength, including military power, and to continue to cooperate more on foreign policy matters. The other is to reach out early and in a focused way to the Trump administration in order to familiarize him with European views and interests. By becoming a strong, powerful partner to the US, Europe would increase the chances that the transatlantic partnership remains what it has been in the recent decades, namely the foundation of the liberal world order. It has made Europe free, safe, and rich.

and he points, somewhat disapprovingly, to Niall Ferguson’s blueprint for a new world order at American Interest:

As I reflected on Trump’s options in the immediate wake of the election, I ran the following thought-experiment. What if Trump, against all expectations, decided to seek better relations with both Moscow and Beijing? This would combine both his own Russophile leanings with Kissinger’s argument for a new policy of partnership with China. Such an arrangement would theoretically be achievable if Trump engaged only in kabuki theater with China over trade (which is what many influential Chinese expect him to do).19 It would also be consistent with the tough line on Islamic extremism that has been such a feature of Trump’s campaign, for on this issue the three great powers—each with their worrisome and growing Muslim minorities—share an interest. And it might be consistent with a re-ordering of the Middle East that re-imposes the ancien régime of kings and dictators in the Arab world and reinforces Israel, all at the expense of Iran, which has no historic reason to expect Russian fidelity, much less Chinese.

As a corollary, the three powers might agree on the demotion of Europe from great power status, taking advantage not only of Brexit but the increasingly fragmented and introspective character of EU politics. One possible way to do this would be for Trump to propose replacing “little” NAFTA with “big” NAFTA—the North Atlantic Free Trade Agreement, which would bring the United Kingdom directly into a post-EU Anglo-Atlantic sphere, while at the same time delivering on Trump’s anti-Mexican (though not anti-Canadian) election pledge. At the same time, Trump could credibly apply pressure on other NATO members to increase their currently risible defense budgets. Finally, he and Putin could work together to help continental populists such as Marine Le Pen to win the elections of 2017. As Roosevelt put it in 1906: “France ought to be with us and England—in our zone and our combination. It is the sound arrangement economically and politically.”

One striking feature of such a strategy is that the five permanent members of the United Nations Security Council would ultimately all be either populist or authoritarian controlled, assuming Le Pen can somehow be helped across the line against the French pacte républicain. Thus might the institutions of Wilsonian collective security end up serving the interests of the great powers as never before: the ultimate revenge of Realpolitik.

Self-evidently, the rest of the world would be the losers of such a great power condominium. Japan and Germany would be the biggest losers, just as they were the biggest beneficiaries of the postwar international architecture designed simultaneously to disarm, constrain, and enrich them—although Kissinger would doubtless urge the new Administration to adopt a Bismarckian approach to Japan, maintaining the U.S. commitment to its defense despite the new partnership with China, while encouraging Germany to remain European rather than nationalist in its outlook.

Although I’ve been pressing for a Great Powers/Sphere of Influence strategy for years, I think there are some shortcomings in what Dr. Ferguson is proposing. To explain why I’ll need to go over some ground I’ve covered before.

The United Nations was formed just about 70 years ago and for much of that it has been dysfunctional. The General Assembly is, as Jeanne Kirkpatrick characterized it 30 years ago, a Third World debating society. The Security Council is formed from the ghosts of the World War II
Allies. The idea of giving the United States, United Kingdom, France, Russia, and China veto power over any resolution might have made some sense for about twenty minutes in 1945 but is nonsensical now. I chalk it up to Alger Hiss’s role in drafting the Charter.

The United Kingdom, France, and China are not our clients and Russia never was. UNSC structure is a formula for irrelevance.

Rather than thinking of the Great Powers as static, we might want to adopt a more dynamic model. What conditions make a country a Great Power? Iran is a great regional power. So are Brazil, South Africa, and India.

Europe has been willingly infantilized for the last 70 years. They like it that way. It maximizes influence and minimizes accountability.

Back when NATO was formed it was said that its purpose was to keep the U. S. in, the Germans down, and the Russians out. It has failed in all but the first of those objectives. Is keeping the U. S. involved in the affairs of Europe still in our national interest? Or is it a formula for turning American soldiers into Germany’s janissaries as it pursues its century-long project of Germanizing Europe?