Unilateral suspension of subsidies wiped out 100k jobs                                              
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July 29, 2019

Permission to republish original opeds and cartoons granted.

Congress should learn from EU failed sugar experiment and reciprocally end subsides globally
The European Union succumbed to pressure from its candy industry and foreign sugar exporters to unilaterally end sugar subsidies in 2006 with the promise that consumers would be the big winners, an argument that is all too frequently heard in the halls of Congress.  Now, with the benefit of hindsight, the EU experiment can be put to rest as an abject failure. Europe tried the unilateral approach and the only beneficiaries were heavily subsidized foreign sugar producers like Brazil and industrial sugar buyers who raked in billions at the expense of farmers and more than 100,000 jobs, while the consumer saw little to no benefit. It is time for Congress to get smart, learn from the mistakes of the EU, and adopt the Yoho bill. Let’s give President Trump the tool he needs to end sugar subsidies, while keeping America’s farmers strong and competitive.

Video: DOJ Antitrust sets sights on Big Tech amid allegations of squashing small businesses and censorship
It’s time for the Justice Department to step up antitrust enforcement of big tech firms like Google, Facebook, Twitter and Amazon that could be harming small business competition and engaging in censorship.

Congress should defund federal government from coordinating with Southern Poverty Law Center
The federal government has regarded the Southern Poverty Law Center as an expert on extremism and  has a long history of coordinating with law enforcement at the federal and state level. SPLC sources were among those used to draft the Department of Homeland Security right-wing extremism memo in 2009. The group also has a history of falsely smearing Christian and conservative organizations as Nazis and white supremacists that more than once prompted domestic terrorists to try and shoot up the Family Research Council and the 2017 GOP Congressional baseball practice. At one point, the Department of Homeland Security even gave the SPLC small contracts. This is unacceptable. And to stop it, Congress must bar the SPLC from receiving any more federal funds and prohibit the government from ever working with the organization again.

ALG praises DOJ and FCC approval of Sprint-T-Mobile merger
Americans for Limited Government President Rick Manning: “Today's Justice Department announcement of its decision to approve the Sprint-T-Mobile merger followed closely by FCC Chairman Ajit Pai's similar statement clears the way for increased competition in the 5G future. These dual announcements are a win for common sense and will help the United States compete in the fast-moving economy that we are entering. Americans for Limited Government often criticizes government as getting in the way of progress and innovation, today we praise both the DOJ and FCC for doing what's right so that Americans can enjoy a strong economic future.”

Oren Cass: America should adopt an industrial policy
“Within the American context, we should work toward the policies that we believe can make a positive difference, even recognizing that the result will be imperfect. Libertarians often posit an ideal world of policy non-intervention as superior to the messy reality of policy action. But that ideal does not exist—messy reality is the only reality and we should not give preference to our existing mess, built on an incorrect understanding of our economic challenges, over one that at least aims closer to the right direction. That’s especially the case here, because you can have free trade, or you can have free markets, but you can’t have both. The market fundamentalists who insisted on eliminating the barriers between our market and China’s have, by their policy choices, introduced massive distortions into our market. Insisting on allowing the distortions, and then announcing that a dislike of distortions precludes any response, is irrational. Insisting that our workers, alone, fight with their hands tied behind their backs is frankly immoral. In the real world as we find it, America has no choice but to adopt an industrial policy, and we will be better for it.”

 

Congress should learn from EU failed sugar experiment and reciprocally end subsides globally

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By Rick Manning

The European Union succumbed to pressure from its candy industry and foreign sugar exporters to unilaterally end sugar subsidies in 2006 with the promise that consumers would be the big winners, an argument that is all too frequently heard in the halls of Congress.  Now, with the benefit of hindsight, the EU experiment can be put to rest as an abject failure.

A series of studies by Patrick Chatenay, the President of ProSunergy (UK) Ltd, conducted over the past thirteen years have shown that while initially prices did go down as foreign subsidized sugar flooded the market, as the European sugar producers were wiped out, prices climbed by 2012 to, “10% above what they were before the reform.  As any business manager will tell you, additional risk entails additional costs.  Since the end of 2010, the EU sugar market has been characterized by high and volatile prices, and a shortage of supplies – thus mirroring world market gyrations.  The sugar users who lobbied hard for the reform – companies such as Nestle, Coca-Cola and Kraft – are complaining just as loudly as before.”

The job costs in the first six years of the disastrous experiment totaled 120,000, as the unilateral action caused 83 sugar mills to close across the continent.

Because Newton’s Third Law of Physics, for every action, there is an equal and opposite reaction, seems to apply to political swings, the European Union’s reaction to the job losses and the new dependency upon foreign sugar exporters was equally catastrophic as the EU put sugar subsidies back in place to the tune of $665 million a year in 2015.

To make matters even worse, Chatenay reports in a newly released report titled, “The European Union Sugar Industry at World Market Prices” that the remaining, weakened European sugar producers are continually pressured by an approximately 20 percent drop in prices which Chatenay predicts will lead to an additional “10 to 20 sugar (EU) factories closing within 5 years…”

Shockingly, or perhaps not, while the sugar producers are getting crushed in the system wrought by the initial unilateral ending of sugar subsidies, Chatenay identifies the large industrial sugar buyers as huge winners having gaining $3.4 billion, “with no discernable advantage” to the consumer.

Pretty sweet deal for Nestle and others, but for European taxpayers and the actual people who grow and process European sugar, it has been a nightmare with the consumer seeing little to no benefit.

While this outcome probably doesn’t surprise anyone who pays attention to corporate cronyism in America, there is a better, smarter path to ending sugar and other agricultural subsidies using the basic trade rule of seeking international reciprocity rather than engaging in the unilateral dropping of government subsidies.

Representative Ted Yoho, (R-FL) has legislation known as Zero for Zero, through which the U.S. government would end sugar subsidies upon the President certifying that other countries had done the same.  By providing up front Congressional action, U.S. government representatives will have a powerful negotiating tool to gain reciprocal actions from other sugar exporting nations. 

It is time for conservatives to rally behind the Zero for Zero plan as it provides a rational road toward ending subsidies without destroying U.S. sugar producers due to unfair trade practices. 

And President Trump with his emphasis on establishing fair, reciprocal trade agreements with economic partners around the globe is the right person to end sugar and many other agricultural subsidies if Congress will just take the bold step of giving him the cudgel of already approved sugar subsidy elimination contingent upon our trading partners doing the same. 

Europe tried the unilateral approach and the only beneficiaries were heavily subsidized foreign sugar producers like Brazil and industrial sugar buyers who raked in billions at the expense of farmers and more than 100,000 jobs, while the consumer saw little to no benefit.

It is time for Congress to get smart, learn from the mistakes of the EU, and adopt the Yoho bill. Let’s give President Trump the tool he needs to end sugar subsidies, while keeping America’s farmers strong and competitive.

Rick Manning is the President of Americans for Limited Government.

Video: DOJ Antitrust sets sights on Big Tech amid allegations of squashing small businesses and censorship

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To view online: https://www.youtube.com/watch?v=oYJrumn0s-Q

Congress should defund federal government from coordinating with Southern Poverty Law Center

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By Richard McCarty

The Southern Poverty Law Center (SPLC) and its co-founder Morris Dees, who was recently fired by the organization, have long and sleazy pasts. Over the years, they have been sharply criticized for their tactics, priorities, and mistreatment of employees.

Despite this, the federal government has regarded the SPLC as an expert on extremism and has a long history of coordinating with law enforcement at the federal and state level. SPLC sources were among those used to draft the Department of Homeland Security right-wing extremism memo in 2009.

The group also has a history of falsely smearing Christian and conservative organizations as Nazis and white supremacists that more than once prompted domestic terrorists to try and shoot up the Family Research Council and the 2017 GOP Congressional baseball practice. At one point, the Department of Homeland Security even gave the SPLC small contracts.

This is unacceptable. And to stop it, Congress must bar the SPLC from receiving any more federal funds and prohibit the government from ever working with the organization again, Americans for Limited Government President Rick Manning says.

“The SPLC derives its power from its involvement with the federal government through various law enforcement agencies, which they abuse by wildly and falsely attacking conservative and Christian groups and individuals under the guise of tolerance. The federal government needs to disassociate itself from this radical far-left agenda driven hate group. The federal government needs to stop legitimizing the SPLC's research which is used by Silicon Valley,” Manning said.

Early in his career, Morris Dees worked on the campaign of a segregationist attorney general candidate and on a gubernatorial campaign of noted segregationist George Wallace. He also defended a Klan member who was accused of attacking people at a civil rights protest. Dees won the case, and the client’s bill was paid, in part, by the Ku Klux Klan. 

In spite of this past, Dees ran the SPLC and pursued slam-dunk cases against the Klan winning huge verdicts for his clients. Unfortunately for SPLC’s clients, the Klan could not pay these large judgments so they only received a small portion of what they were owed. Of course, that did not matter to Dees and the SPLC. They wanted headlines and donations, and they got both. In the 1980s, the SPLC’s entire legal staff resigned in protest over the organization’s direction and Dees’ treatment of staff attorneys.

In the 1990s, the Montgomery Advertiser published a series of articles highlighting the SPLC’s problems. The investigation began after a stream of former SPLC employees told the Advertiser that the SPLC “was not what it appeared to be” and urged the newspaper to investigate. Among other things, the paper found that black SPLC workers "felt threatened and banded together." A black former intern told the paper, "I think there's a real question as to the sincerity and legitimacy of the organization because of the noticeable absence of blacks there… You know, it's sort of like the pot calling the kettle black." The Advertiser’s series on the SPLC was subsequently nominated for a Pulitzer Prize.

Over the past quarter century, there has been plenty of further criticism of Dees and the SPLC. For example, Harper’s published a letter in 2007 from civil rights attorney Stephen Bright. In the letter, Bright explained why he would be unable to attend the presentation of the “Morris Dees Justice Award.” His reason: “Morris Dees is a con man and fraud.” Bright went on to strongly criticize Dees’ fundraising methods.

“The positive contributions Dees has made to justice–most undertaken based upon calculations as to their publicity and fund raising potential–are far overshadowed by what Harper’s described as his “flagrantly misleading” solicitations for money. … He has taken advantage of naive, well-meaning people–some of moderate or low incomes…”

After Dees’ firing, a former SPLC staffer wrote in the New Yorker, “All the time, dark shadows hung over everything: the racial and gender disparities, the whispers about sexual harassment, the abuses that stemmed from the top-down management, and the guilt you couldn’t help feeling about the legions of donors who believed that their money was being used, faithfully and well, to do the Lord’s work in the heart of Dixie. We were part of the con, and we knew it.”

Several days after the publishing of the New Yorker article, Current Affairs published an article by a liberal author. The author looked into some of the groups included in the SPLC’s “hate map” and concluded that “it’s an outright fraud.” The map includes “groups” that appear to be defunct or are just individuals with bizarre or disgusting views. After researching the hate map and considering the organization’s fundraising and spending, the author concluded that, “To me, this is a scam bordering on criminal mail fraud.”

The following week, the Washington Post published an op-ed from the managing editor of the Advertiser at the time of its SPLC investigation. The former editor called for an investigation of the SPLC by the Internal Revenue Service and the Justice Department’s Civil Rights Division.

After years of running the organization as a plantation with few blacks in leadership positions, allegedly allowing the co-founder to sexually harass women and retaliating against those who complained, misleading the public and its donors about the threat of the Klan and other extremist organizations and falsely smearing opponents, the SPLC has no moral authority. It also has no business receiving a dime from taxpayers, and Congress should see to it that it does not and prohibit the federal government from ever coordinating with them again.

Richard McCarty is the Director of Research at Americans for Limited Government Foundation.

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ALG praises DOJ and FCC approval of Sprint-T-Mobile merger

July 26, 2019, Fairfax, Va.—Americans for Limited Government President Rick Manning today issued the following statement praising the decision of the Justice Department Antitrust Division and the Federal Communications Commission to approve the Sprint-T-Mobile merger:

"Today's Justice Department announcement of its decision to approve the Sprint-T-Mobile merger followed closely by FCC Chairman Ajit Pai's similar statement clears the way for increased competition in the 5G future. These dual announcements are a win for common sense and will help the United States compete in the fast-moving economy that we are entering. Americans for Limited Government often criticizes government as getting in the way of progress and innovation, today we praise both the DOJ and FCC for doing what's right so that Americans can enjoy a strong economic future."

To view online: https://getliberty.org/2019/07/alg-praises-doj-and-fcc-approval-of-sprint-t-mobile-merger/

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ALG Editor’s Note: In the following featured analysis from Law and Liberty, Oren Cass makes the case for a national industrial policy that puts America first:

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America should adopt an industrial policy

By Oren Cass

’d like to begin with a quote attributed to Michael Boskin when he was Chair of George H. W. Bush’s Council of Economic Advisers: “Computer chips, potato chips, what’s the difference?” My argument, in its simplest form, is that there’s a very large difference, and policymakers should take it into account.

My argument rests on three claims, moving from economics to policy and then politics:

First, that market economies do not automatically allocate resources well across sectors.

Second, that policymakers have tools that can support vital sectors that might otherwise suffer from underinvestment—I will call those tools “industrial policy.”

Third, that while the policies produced by our political system will be far from ideal, efforts at sensible industrial policy can improve upon our status quo, which is itself far from ideal.

Why Manufacturing Matters

Economics first: Why do we care about the economy’s composition? For one thing, it has serious distributional consequences. If we only care about consumption, we might believe we can remedy those with redistribution—let the wealth get created by people working in tech or finance in just a few cities, then collect taxes from them and mail checks to everyone else. But if we value, as we should, the ability of individuals, their families, and their communities to participate as productive contributors to society, then our economy needs to generate good opportunities for workers of different aptitudes in different places. 

We also care because some industries matter more for the economy’s health and long-run trajectory. Some achieve greater productivity gains. Some rely on, and foster, broader ecosystems of researchers and specialists, suppliers and customers. Some generate larger “multiplier” effects for other employment.  

Manufacturing, from these perspectives, is particularly important. Our popular obsession with manufacturing isn’t some nostalgic anachronism. (Here I use “manufacturing” to encapsulate the sector of our economy that makes physical things—traditional manufacturing, resource extraction, energy production, agriculture, some construction, and so forth.) Manufacturing provides particularly well-paying, stable employment—especially for men with less formal education. Manufacturing also tends to deliver faster productivity growth because its processes are susceptible to technological advances that complement labor and increase output. 

Echoing Boskin on potato chips, President Obama’s CEA Chair, Christina Romer, once wrote: “consumers value haircuts as much as hair dryers.” Fair enough, for consumers. But not for workers. A barber today is barely more productive than one of past generations, while someone making hair dryers might help churn out ten times the product of his predecessors (assuming, of course, we still made hair dryers here). If that barber wants his wage to rise, he’d better hope his customers are productivity-gaining hair-dryer makers, not just personal-services providers themselves.

Note also that, while our economy can be predominantly services-based, not everyone can cut each other’s hair. If the local hair-dryer factory moves overseas and the laid-off workers all try to shift into local services, the community will face a rather existential crisis: what will it send the rest of the world, in return for all the things that it wants the world to send it? 

When communities lose manufacturing—which is not the only form of tradeable production, but certainly the primary one—they begin to “export need.” You see this across America, in the dilapidated shopping centers that still have sparkling occupational therapy offices. They are literally the exporters for those towns, exporting to the nation’s taxpayers the care of local residents on disability. That’s how the community attracts resources. This might look fine in the aggregate consumption data, but we should not consider such outcomes equal, or acceptable.

Finally, manufacturing is unique for the complexity of its supply chains and the interaction between innovation and production. One of the most infuriating face-palms of modern economics is the two-step that goes like this: First, wave away concern as other countries with aggressive industrial policies that attract our critical supply chains overseas, explaining that it doesn’t matter where things get made. Second, wait for people to ask “why can’t we make this or that here,” and explain that of course we can’t because all of the supply chains and expertise are entrenched elsewhere. It’s enough to make one slam one’s head into the podium.

We are also discovering that innovation and production are not so easily disaggregated. Where manufacturing goes, research and design follow. Here I’ll quote Andy Grove, long-time CEO of Intel:

Our pursuit of our individual businesses, which often involves transferring manufacturing and a great deal of engineering out of the country, has hindered our ability to bring innovations to scale at home. Without scaling, we don’t just lose jobs — we lose our hold on new technologies. Losing the ability to scale will ultimately damage our capacity to innovate.

So, computer chips, potato chips, hair dryers, haircuts… the differences are enormous. Still, the case for industrial policy requires recognition not only of certain sectors’ value, but also that the market will overlook the value in theory and that we are underinvesting in practice.

That the free market will not solve this should be fairly self-evident, and is entirely consistent with economic theory. The long-run value, both social and economic, of a robust manufacturing sector is of no concern to a given individual allocating his own resources. It has nothing to do with the most efficient allocation of resources at any point in time. It does not offer a higher return on capital. 

And sure enough, we are suffering from a failure to invest. Output growth in the manufacturing sector itself has slowed dramatically and employment has plummeted, even as compared to other developed economies. Manufacturing output is only 12% of GDP in America, compared to 19% in Japan and 23% in Germany. Economy-wide, private-sector investment has declined, so much so that the private sector is now a net lender in the economy and only the government borrows. Productivity growth has slowed nationwide, even flatlining in recent years. Wages have stagnated. Our trade deficit has skyrocketed, even in advanced technology products like life sciences and electronics.

That is the economic case for industrial policy: manufacturing is important, markets ignore this, and we are paying the price.

A Path Forward

It’s one thing to identify a problem, quite another to suggest we can do anything about it. The good news here is that we can—indeed, not by coincidence have other developed, market economies like Germany and Japan chosen to adopt industrial policies and also reaped the rewards we might expect.

I will describe briefly the types of policies we should consider, from least to most aggressive; Richard can draw the line where he begins to object and we can debate specifics from there:

Certainly, the policies that emerge from our political process will be imperfect, opportunities for regulatory capture will abound, market distortions will emerge. But here we arrive at the third and final point: for all the limitations of our politics, adoption of an industrial policy will improve upon the status quo. 

One reason to believe this is to observe that other market democracies like Germany and Japan have pursued the approach successfully. Also probative, we should admit, is China. Of course, China’s circumstances are radically different from America’s. But it would be hard to reconcile an assertion that policy support for a manufacturing sector makes it inevitably weaker with the actual experience of the Sino-American trading relationship over the past two decades.

Within the American context, we should work toward the policies that we believe can make a positive difference, even recognizing that the result will be imperfect. Libertarians often posit an ideal world of policy non-intervention as superior to the messy reality of policy action. But that ideal does not exist—messy reality is the only reality and we should not give preference to our existing mess, built on an incorrect understanding of our economic challenges, over one that at least aims closer to the right direction.

That’s especially the case here, because you can have free trade, or you can have free markets, but you can’t have both. The market fundamentalists who insisted on eliminating the barriers between our market and China’s have, by their policy choices, introduced massive distortions into our market. Insisting on allowing the distortions, and then announcing that a dislike of distortions precludes any response, is irrational. Insisting that our workers, alone, fight with their hands tied behind their backs is frankly immoral.

In the real world as we find it, America has no choice but to adopt an industrial policy, and we will be better for it.

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