The World’s Most Canny Politician

Running an emerging global power and vibrant democracy would be hard enough without having one of the world’s most oppressive, erratic, and brutal states next door.

Yet South Korean leader Moon Jae In, less than a year into his presidency, has not only governed his prosperous country fairly well (if his stellar approval ratings are any indication), but he’s pulled off an amazing feat virtually no one though possible (much less any world leader): getting North Korea to tone down its bellicose rhetoric, suspend its nuclear program, and express willingness to participate in an historic summit between his nation and the North’s archenemy the United States — the two nations are even setting up a direct hotline between their leaders, which will not only mitigate the likelihood of an escalating conflict, but is a big symbol of the potential for normal relations (and one would hope, eventually reunification). Continue reading

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Our Globally Centered Economy

Believe it or not, there is a lot to celebrate about the economy as of late, both here and elsewhere.

The U.S. stock market is going strong, with the S&P 500 at an all-time record. But the German and Japanese markets are up by more, and markets in the U.K., Canada, South Korea, Taiwan, and elsewhere are also seeing record growth.

While the U.S. unemployment rate is the lowest in almost two decades, Japan’s is also the lowest since then, with the U.K. and Germany seeing the lowest rate since the 1970s.

Although America’s GDP growth is above expectations this year, so is Japan‘s and the eurozone’s (the 19 European Union countries that use the euro). In fact, the eurozone grew faster than the U.S. economy, contrary to popular belief about its imminent collapse.

The point of this isn’t to make light of our well needed economic gains, but to point out that our success is part of a broader global trend, and that we depend on numerous other countries and trading blocs to stay afloat.

Without having global partners to serve as our suppliers, consumers, and labor force, we would not be doing so well, and our economy would not be as large and diversified in the first place.

Nowadays, all our biggest and most innovative companies are multinational in character, relying on talented people from across the world to design or create their products (if not run the companies entirely). In such a globalized era, diplomacy is paramount.

Source: Vox.com

How Other Countries Handle Taxes

As I join my fellow Americans in dreading tax day, it is worth reflecting on whether it needs to be this way. Fortunately, the rest of the world provides us with plenty of alternatives and counterexamples.

In an interview with PBS NewsHourT.D. Reid, a former Washington Post columnist, shared insights from his travels across the world in search of a better tax system. (About which he has published a book, A Fine Mess: A Global Quest for a Simpler, Fairer, and More Efficient Tax System.

He starts with New Zealand’s “BBLR” policy: broaden the base, lower the rates. Basically, the government makes everything taxable — from the free parking covered by your employer, to the mortgage you take out for a house, it all counts as income to you and thus you get no tax breaks.

As it turns out, making just about everything potentially taxable end up being a win-win for everyone: because it isn’t losing revenue through various tax breaks and loopholes, the New Zealand government can afford a lower than rate (half that of the U.S.) while bringing more money per capita. Hence it can fund education, universal healthcare, and other public goods without burdening businesses and individuals.

Reid also observed that most New Zealanders subsequently had an easier and quicker time doing taxes: it wasn’t something they had to dread every year.

The blase attitude towards taxes was seen elsewhere as well:

I was in the Netherlands on March 31, the day before their taxes are due.

I was with an executive who makes $200,000 a year, two mortgages, a lot of investments. He’d have to fill out 12 forms in America. I said, Michael, how do you pay your taxes? He pops a beer. He goes online. The government’s filled in every line. If the numbers look right, he clicks OK. It takes five minutes.

And, in Japan, you get a postcard from the IRS that says, we think you made this much. We withheld this much. We owe you a refund of that much. We will put it in your bank on April 1. It takes one minute, if you think the numbers are right.

And I said to my friend Togo, you know, in America, people spend hours, days filling out these forms. And he said to me, why would anybody want to do that?

Reid also points out that the U.S. government could easily do our taxes for us, a proposition that seems unthinkable even though it makes sense upon further reflection. After all, IRS does have the same financial information we do. Dylan Matthews over at Vox.com expands on this argument further:

Here’s the thing about [tax] forms: The IRS gets them too. When Vox Media sent me a W-2 telling me how much it paid me in 2017, it also sent an identical one to the IRS. When my bank sent me a 1099 telling me how much interest I earned on my savings account in 2017, it also sent one to the IRS. If I’m not itemizing deductions (like 70 percent of taxpayers), the IRS has all the information it needs to calculate my taxes, send me a filled-out return, and let me either send it in or do my taxes by hand if I prefer.

This isn’t a purely hypothetical proposal. Countries like Denmark, Sweden, Estonia, Chile, and Spain already offer “pre-populated returns” to their citizens. The United Kingdom, Germany, and Japan have exact enough tax withholding procedures that most people don’t have to file income tax returns at all, whether pre-populated or not. California has a voluntary return-free filing program called ReadyReturn for its income taxes.

It is interesting how countries most Americans regard as socialist and bloatedly statist actually impose fewer tax burdens on businesses and individuals. It goes to show that you can have it both ways: promote prosocial state policies without sacrificing entrepreneurial freedom — provided you do not have powerful special interests who benefit from the status quo:

So why hasn’t return-free filing happened yet? The short answer is lobbying, and in particular lobbying by companies like Intuit. In 2013, ProPublica’s Liz Day wrote an incredible exposé on just how hard Intuit has lobbied to stop return-free filing from becoming a reality:

[In 2007] a bill to limit return-free filing was introduced by a pair of unlikely allies: Reps. Eric Cantor, R-Va., the conservative House majority leader, and Zoe Lofgren, D-Calif., a liberal stalwart whose district includes Silicon Valley.

Intuit’s political committee and employees have contributed to both. Cantor and his leadership PAC have received $26,100 in the past five years from the company’s PAC and employees. In the last two years, the Intuit PAC and employees donated $26,000to Lofgren.

…In 2005, California launched a pilot program called ReadyReturn. As it fought against the program over the next five years, Intuit spent more than $3 million on overall lobbying and political campaigns in the state, according to Dennis J. Ventry Jr., a professor at UC Davis School of Law who specializes in tax policy and legal ethics.

They haven’t stopped; in 2014, Day reported that Intuit was involved with an astroturfing effort meant to manufacture the appearance of grassroots opposition to automatic filing. Intuit spent $13 million lobbying Congress from 2011 to 2015, with 41 lobbying reports relating to taxes in 2015 alone. Most of the reports reference lobbying to “enhance voluntary compliance” — a euphemism for opposing automatic filing.

In this, Intuit and other tax prep companies had a powerful ally: Grover Norquist. The anti-tax crusader vehemently opposes automatic filing on the grounds that it makes tax season insufficiently nightmarish, which might reduce people’s aversion to taxes and make it easier for politicians to pass tax increases. So even though Ronald Reagan himself supported automatic filing, Norquist has helped make the idea dirt in the eyes of conservative legislators.

All this despite both conservatives and liberals alike supporting return-free tax filing. We can only hope that Americans will soon reach a breaking point after a few more stressful tax days. Then again, maybe our famously anti-tax political culture is, ironically, too used to hating taxes to actually consider streamlining them.

Mexico’s Forgotten World War Two Posters

Mexico hardly comes to mind when one thinks of the Allied powers. But it was one of dozens of countries that joined together to defeat the Axis, doing so just months after the United States.

Following the losses of several ships — most notably the Potrero del Llano and the Faja de Oro, which are referenced in the propaganda — to German U-boats, Mexico declared war on the Axis on May 22, 1942 Though most of Latin America joined the Allied cause, Mexico was one of only two Latin American countries (along with Brazil) to send troops overseas to fight the Axis.

According to SplinterNews.com, like most countries that participated in the conflict, Mexico sought to mythologize its role with hundreds of posters and political cartoons. To that end, the government commissioned an existing artistic, Taller de Gráfica Popular, which had been founded in 1937, to glorify its role in this just war.

The most famous Mexican contribution was “Escuadrón 201“, also known as the Aztec Eagles, a group of more than 300 volunteer pilots who trained in the United States to fight against Japan. It was the first Mexican military unit trained for overseas combat, and it partook in close to 100 combat missions and nearly 800 sorties.

Mexico also signed a series of agreements with the U.S., known as the Bracero Program, which sent much-needed Mexican labor to the U.S. to support the war economy.

Even though its contributions were small in the grand scheme of things, the efforts of Mexican artists were creatively outsized.

America’s Most Successful Intelligence Agency You Never Heard Of

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Compared to the likes of the NSA, CIA, and FBI, the State Department’s Bureau of Intelligence and Research (INR) is hardly a household name.

Of the 16 intelligence agencies that make up the U.S. Intelligence Community (IC), it is the oldest civilian member (created in 1947), yet also smallest and least imposing: it has only 300 staff, lacks satellites and spies, and does not engage in espionage or counterintelligence. INR analysts are typically in their forties and fifties and highly educated (close to three quarters have advanced degrees, of which a quarter hold PhDs). It main duties are to provide diplomats with information and analysis to help facilitate U.S. foreign policy — in other words, the sort of eggheaded, academic stuff most Americans would dismiss as globalist fluff.

Yet the INR is perhaps the most effective and reputable intelligence agency in the country. It originated in the Second World War as the Research and Analysis Branch of the Office of Strategic Services, the precursor to the CIA. Its job was to scour all available sources of information — from academic texts to newspapers — to determine the strengths and weaknesses of the Axis power. It was made up of scholars, historians, anthropologists, political scientists and diplomats — hardly the sort of people that come to mind as militarily useful. (Indeed, its veterans included several presidents of the American Historical Association and the American Economic Association, as well as two Nobel Laureates.)

The R&A proved so pivotal to the war effort, and was held in such high esteem, that when the OSS was disbanded at the end of the war, it was one of the few components to be retained and thereafter transferred to the State Department.

In spite of its small size — a fifth of the 1,500-plus analysts at the CIA, and about a tenth of the 3,000 or so at the Pentagon’s Defense Intelligence Agency — the INR also has the best track record when it comes to the accuracy of its reports. Its bomb damage assessments during the Vietnam War were more accurate than the Pentagon’s; it was skeptical about the U.S. strategy in Vietnam; it warned that allowing the deposed Shah of Iran to enter the U.S. for medical treatment would lead to trouble (the U.S. Embassy was ultimately seized); and it cautioned that a bombing campaign in the former Yugoslavia would not succeed in forcing the Serbs out of Kosovo.

Moreover, the INR was virtually the sole dissenter in the intelligence community regarding the claim that Iraq had an active nuclear weapons program. It also criticized the theory that the Iraq War would bring democracy to the Middle East, warned that Turkey would not allow U.S. troops to cross into Iraq, and casted doubt on the British claim that Iraq was trying to precure uranium from Niger — all of which proved correct.  (Though the INR was still wrong, along with other intelligence agencies, in asserting that Iraq possessed chemical and biological weapons.)

Consequently, the agency escaped the most scathing criticism in the Senate Intelligence Committee’s 2004 report of the IC’s prewar intelligence on Iraq. The Committee also commended the organization as a model for its bigger and better-resourced counterparts. A New York Times piece published at the time noted the small size yet elite nature of the INR’s Iraq team:

Altogether, the team of State Department analysts most directly involved in assessing Iraq’s political structure, economy, conventional military forces and supposed illicit weapons numbered no more than 10 people, said State Department officials, but many had more than a decade of experience in the subjects on which they were focusing.

Those officials refused to identify the analyst whose dissent on Iraq’s nuclear program proved particularly prescient, but said the official had worked on the subject for more than 12 years under a supervisor who had twice as many years of expertise.

Too bad the Secretary of State at the time, Colin Powell, chose to side with the CIA’s (ultimately erroneous) position rather than that of his own bureau.

Remarkably, the INR is also one of the few federal government bureaucracies — especially in the often bloated, unaccountable military-intelligence apparatus — to have shrunk significantly since the 1960s. Its success, in spite of its small size, can be chalked up to the following observation by David Ignatius over at The Washington Post:

But INR’s success story suggests that small is sometimes beautiful. Because it is little, INR tries to maintain an elite reputation. And because it is intimately connected with State Department policymakers, it never loses sight of what the consumers of intelligence actually want: sound judgment.

[…]

What the State Department bureau lacks in numbers it makes up in expertise. The average analyst has 11 years of experience in his area of expertise, four times as long as the CIA average, according to a State Department official. Many INR veterans have several decades of experience in their areas of specialization. The Near East South Asia section chief has been analyzing that area for 25 years; the European chief has spent 24 years studying his region. And because the bureau is so small, each analyst has broad responsibility; one person covers all the German-speaking countries in Europe; another has responsibility for all the Scandinavian countries.

The reason INR has been so effective, State Department officials say, is that it has maintained a culture that supports dissent — and demands expertise. “We’d rather be right than quick,” says one State Department official. Within the intelligence community, the State Department’s analysts say they are seen as “malcontents” who demand hard evidence before they sign off on estimates. Their style is to ask: “What are the facts? How much do we know? Does the evidence all point in one direction?”

Indeed, the fact that the INR is one of the few intelligence agencies not to report directly to either the White House or the Pentagon arguably gives it a lot more freedom. As a solely analytical agency, it owes no allegiance to the powers that be, nor to any particular agents; it seeks only to provide the information it has gathered and reviewed, which, as of 2005, included up to two million reports and 3,500 written assessments annually.

Granted, as happened with the Iraq War, this means the INR can easily be ignored for its inconvenient truths. But that does not stop it from at least trying to make U.S. foreign policy an informed and sound enterprise. Plus, it does contribute to the Presidential Daily Briefings, and regularly conducts an honest (if not always heeded) review of other intelligence activities and operations to make sure they conform to U.S. foreign policy interests (such as making sure an espionage action abroad does not damage our relations or destabilize the foreign nation).

It goes to show that for all of Americans’ usual dismissiveness of “Ivory Tower” intellectuals and “globalist” diplomats, they can and do play a useful role for our national interests, and often do a better job than the tougher and “sexier” agencies like the CIA.

To be sure, the INR, like any government institution — and certainly like any member of the U.S. security apparatus — has its flaws and vested interests. Yet its record of being right — and very often ignored — shows that it is something of a freethinking rebel within the IC, willing to say the hard truths regardless of their reception. For what that is worth, more of that is needed in our military-intelligence community.

When Helping People Isn’t “Sustainable”

Count on America’s venal financial class to engage unironic self parody.  According to a recent CNBC report, Goldman Sachs, one of the largest financial institutions in the world, asked whether the use of cutting-edge genetic therapy to cure patients is a “sustainable business model”: Continue reading

Lessons from Senegal on Regulating Sex Work

When it comes to public health innovations, Senegal rarely come to mind as a role model. But as the The Economist recently reported, the country is an outlier on the continent (and indeed much of the world) in treating sex work as a public health matter. Continue reading

Africa’s Ambitious New Free Trade Agreement

To most outsiders, Africa is a perpetually chaotic and conflict-ridden place, despite the fact that wars on the continent (both civil and inter-state) are at a historic low (albeit from a high base and with some nasty conflicts still brewing).

To take advantage of these improving political circumstances, and its nascent economic potential, most of Africa is coming together to forge the sort of pact typically seen as the pursuit of wealthier states: a united commercial market known as the African Continental Free Trade Area

From The Washington Post (bolding mine):

On Mar. 21, 44 African heads of state and government officials met in Kigali, Rwanda, to sign the framework to establish this initiative of the African Union.

The AfCFTA will come into effect 30 days after ratification by the parliaments of at least 22 countries. Each country has 120 days after signing the framework to ratify.

This will be one of the world’s largest free-trade areas in terms of the number of countries, covering more than 1.2 billion people and over $4 trillion in combined consumer and business spending if all 55 countries join. 

[…]

It creates a single continental market for goods and services as well as a customs union with free movement of capital and business travelers. The African Union agreed in January 2012 to develop the AfCFTA. It took eight rounds of negotiations, beginning in 2015 and lasting until December 2017, to reach agreement.

The A.U. and its member countries hope the AfCFTA will accelerate continental integration and address the overlapping membership of the continent’s regional economic communities (RECs). Many African countries belong to multiple RECs, which tends to limit the efficiency and effectiveness of these organizations.

One of its central goals is to boost African economies by harmonizing trade liberalization across subregions and at the continental level. As a part of the AfCFTA, countries have committed to remove tariffs on 90 percent of goods. According to the U.N. Economic Commission on Africa, intra-African trade is likely to increase by 52.3 percent under the AfCFTA and will double upon the further removal of non-tariff barriers.

In addition to facilitating existing economic activity, it is hoped that ACFTA will help promote Africa’s underdeveloped but fast growing manufacturing sector, diversifying its economies beyond agriculture and resource extraction.

While it remains to be seen how this ambitious effort will play out, it is definitely a step in the right direction, especially for a region that is the youngest and most potentially dynamic in the world.

Finland’s Simple But Radical Solution to Homelesssness

While most of the developed world struggles with growing or stubbornly unchanged rates of homelessness, one nation is bucking the trend: Finland has seen the number of homeless people decline from its peak of 18,000 just thirty years ago, to 7,000 today (of whom 5,000 are at least in temporary housing with loved ones). It has accomplishd this in a deceptively simple way: by giving homeless people homes.

According to the Christian Science Monitorit all began with the Finnish government making homelessness a national priority:

The elimination of homelessness first appeared in the Helsinki government’s program in 1987. Since then virtually every government has devoted significant resources toward this end.

Around 10 years ago, however, observers noticed that although homelessness in general was declining, long-term homelessness was not. A new approach to the problem was called for, along with a new philosophy.

The optimal solution, a group of four experts appointed by the Ministry of the Environment found, was Housing First. “Solving social and health problems is not a prerequisite for arranging housing,” they observed. “Instead, housing is a prerequisite that will also enable solving a homeless person’s other problems.”

The concept behind the new approach was not original; it was already in selective use in the US as part of the Pathways Model pioneered by Dr. Sam Tsemberis in the 1990s to help former psychiatric patients. What was different, and historic, about the Finnish Housing First model was a willingness to enact the model on a nationwide basis.

So while the Finns aren’t the first to tackle homelessness, they are the first to do so on a national level, thus bringing many more resources and ideas to bear.

“We understood, firstly, that if we wanted to eradicate homelessness we had to work in a completely different way,” says Mr. Kaakinen, who acted as secretary for the Finnish experts. “At the same time right from the beginning there was a national consensus that the problem had reached a crisis point. … We decided as a nation to do something about this.”

[…]

As a result, in 2008 the Finnish National Program to reduce long-term homelessness was drafted and put into place. Helsinki and nine other Finnish cities committed to the program, with the Ministry of the Environment coordinating its implementation, and local governments and nongovernmental organizations, including the Y-Foundation, joining the team.

One of those goals was to cut the number of long-term homeless in half by producing 1,250 new homes, including supported housing units for tenants with their own leases, and around-the-clock presence of trained caring staff for residents who needed help.

 At the same time, the extant network of homeless shelters was phased out. This also involved phasing out the “old way” of thinking about homelessness. “There was some work to be done on attitudes,” concedes Kaakinen. “Some of the people in the NGOs found the idea of unconditional housing hard to accept.” Also some staff had difficulty with not forcing tenants with alcohol or drug problems to go cold turkey before they were given housing.

The model’s success speaks for itself: across the nation, chronic homelessness fell by 35 percent between 2008 and 2015; in some communities, it was halved.

Of course, building new housing and employing specially trained, round-the-clock caregivers is not cheap, costing the government nearly $382 million in that same span of time. Yet supporters of the program point out that this all pays for itself: according to one 2011 study, the country saved $18,500 annually for every homeless person given housing and professional support. That’s because they no longer needed to rely on emergency medical or police services to help them.

But as Juha Kaakinen, CEO of the Y-Foundation, which helps provide 16,500 low-cost apartments for the homeless, points out:

“Of course the fact that the program pays for itself is important, but beyond that, from a moral point of view, as a society which cares for all of its citizens, we didn’t think we see an alternative. This, we felt, was the way to go forward. And we did.”

Immigrants in U.S. Largely Law Abiding

According to one of the largest and most comprehensive studies of its kind, immigrants in the United States are not only overwhelmingly law abiding, but their increased presence in many communities has mostly correlated with a reduction in crime. From the New York Times:

According to data from the study, a large majority of the areas have many more immigrants today than they did in 1980 and fewer violent crimes. The Marshall Project extended the study’s data up to 2016, showing that crime fell more often than it rose even as immigrant populations grew almost across the board.

In 136 metro areas, almost 70 percent of those studied, the immigrant population increased between 1980 and 2016 while crime stayed stable or fell. The number of areas where crime and immigration both increased was much lower — 54 areas, slightly more than a quarter of the total. The 10 places with the largest increases in immigrants all had lower levels of crime in 2016 than in 1980.

And yet the argument that immigrants bring crime into America has driven many of the policies enacted or proposed by the administration so far: restrictions to entry, travel and visas; heightened border enforcement; plans for a wall along the border with Mexico. This month, the Justice Department filed a lawsuit against California in response to the state’s restrictions on local police to assist Immigration and Customs Enforcement officers in detaining and deporting undocumented immigrants charged with crimes. On Tuesday, California’s Orange County signed on in support of that suit. But while the immigrant population in the county has more than doubled since 1980, overall violent crime has decreased by more than 50 percent.

There’s a similar pattern in two other places where Mr. Trump has recently feuded with local leaders: Oakland, Calif., and Lawrence, Mass. He described both cities as breeding grounds for drugs and crime brought by immigrants. But Oakland, like Orange County, has had increasing immigration and falling crime. In Lawrence, though murder and robbery rates grew, overall violent crime rates still fell by 10 percent.

In general, the study’s data suggests either that immigration has the effect of reducing average crime, or that there is simply no relationship between the two, and that the 54 areas in the study where both grew were instances of coincidence, not cause and effect. This was a consistent pattern in each decade from 1980 to 2016, with immigrant populations and crime failing to grow together.

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