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  • Author: Roger Noriega
  • Publication Date: 06-2007
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: Not long ago, the governments of the Americas recognized the value of working together to consolidate the historic, promising trend toward democracy. Now, with democracy being dismantled in several nations and being assailed by authoritarian Venezuelan president Hugo Chávez Frías, Latin American countries seem to have abandoned the fraternal ideal of inter-American solidarity. The United States and the Organization of American States (OAS) can both do more to salvage the regional commitment to democracy, but unless Latin American and Caribbean governments are willing to stand together to defend their principles, the end of democratic solidarity is in sight.
  • Topic: Democratization, Political Economy, Politics
  • Political Geography: United States, America, Latin America, Caribbean, Venezuela
  • Author: Roger F. Noriega, Megan Davy
  • Publication Date: 04-2007
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: The thorny issue of immigration may yet prove to be a winner for President George W. Bush, but he has to gamble that leaders from both parties are more interested in solving this problem than in saving the debate for the 2008 campaign. The Bush administration can be faulted for failing to put more security resources at our borders after the terrorist attacks of September 11 and for not advancing the president's comprehensive immigration reform before the debate was dominated by shrill voices. President Bush's approach on immigration, however, remains a sound one, and his declarations during his March visit to Mexico indicate a dogged desire to tackle this issue. A Democratic Congress may find that it needs to demonstrate its ability to find practical, bipartisan solutions to even the toughest of problems.
  • Topic: International Relations, Migration
  • Political Geography: United States, Central America, Mexico
  • Author: Mark Falcoff
  • Publication Date: 04-2007
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: Since its financial crisis six years ago, Argentina has faded somewhat from the headlines. This is no doubt due in large part to the disproportionate space our media outlets now devote to Iraq and Iran, but also to the fact that other Latin American news stories—particularly Fidel Castro's surgery and the antics of Venezuela's clownish president Hugo Chávez—have dominated coverage of the area. Argentina is not, however, a negligent regional actor.
  • Topic: International Relations, Economics, Government
  • Political Geography: Iraq, Iran, Argentina, South America, Latin America, Venezuela
  • Author: Robert F. Noriega
  • Publication Date: 02-2007
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: As Fidel Castro shuffles off the world stage, many non-Cubans are pondering the future of a nation that has spent nearly fifty years trapped under the rubble of the dictator's demented experiment. Too many outsiders, however, are disoriented by the myths that the regime has spun over the past five decades to make the island seem complicated, bedeviled, dangerous, and unapproachable. Castro realized that if the world came to comprehend Cuban reality, then even the intelligentsia might notice something wrong with the way he ran the place.
  • Topic: International Relations, Development, Politics
  • Political Geography: Cuba, Central America
  • Author: Mark Falcoff
  • Publication Date: 01-2007
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: The recent passing of Chilean dictator Augusto Pinochet and the events surrounding his last illness, death, and burial remind us that we are living through the last moments of a Latin American drama which began nearly a half-century ago with the Cuban Revolution. The only thing lacking to bring the curtain down once and for all is the disappearance of Fidel Castro, who began the whole business. Though no one knows precisely when that eventuality will occur, the Cuban strongman's unprecedented decision last July to transfer effective power to his younger brother Raúl and his failure to reappear publicly after abdominal surgery after nearly six months suggest it cannot be far off.
  • Topic: International Relations, Civil Society, Government
  • Political Geography: South America, Cuba, Latin America
  • Author: John H. Makin
  • Publication Date: 12-2007
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: It is important at the outset to define the terms “financial firms” and “too much risk.” By “financial firms,” I mean commercial banks, investment banks, brokerages, and insurance companies that solicit and manage funds for the public. By “too much risk,” I mean actions undertaken by managers of financial firms that result in substantial losses for the shareholders (owners) of such firms. On an aggregate level, I call “systemic risks” those that emerge when regulators and policymakers are forced to choose between either reinforcing (with bailouts) the venturesome investing that created the problem or allowing substantial damage to depositors and shareholders in financial firms, and possibly to the economy as a whole.
  • Topic: Economics, International Trade and Finance, Markets
  • Political Geography: United States
  • Author: John H. Makin
  • Publication Date: 11-2007
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: Just as Wall Street was celebrating the presumed end of the latest financial crisis by pushing stocks to record highs, proclaiming continued strong earnings growth, and continuing to recite the mantra “slowdown, but no recession,” Treasury Secretary Henry Paulson provided a vivid reminder that the housing and mortgage crisis is not over. On Monday, October 15, while Citibank was reporting that compared with last year's results its third-quarter earnings had fallen by 57 percent, the Treasury's “super-SIV” plan was revealed. It seems that the Goldman Sachs alumni at Treasury—Paulson and his under secretary for domestic finance, Robert Steel—had become concerned that the offbalance- sheet special investment vehicles (SIVs) held by commercial banks might not be financeable. That would mean that not enough investors could be found to provide the short-term financing necessary to sustain SIVs, the repositories of hardto- value securitized mortgages that continue to plague bank balance sheets.
  • Topic: Economics, International Trade and Finance, Markets
  • Political Geography: United States
  • Author: John H. Makin
  • Publication Date: 10-2007
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: The global economic and financial picture is changing rapidly. A review of some of the key elements is in order, as the U.S. economy has slowed rapidly and the Federal Reserve has responded aggressively with rate cuts, while the Bank of England's tough policies pushed one of the United Kingdom's largest mortgage lenders, Northern Rock, to the brink of collapse as a bank run on that suddenly beleaguered institution ensued. Meanwhile, Japan, still the world's second-largest economy—though perhaps the least dynamic of the major ones—slipped into negative growth at a 1.2 percent annual rate in the second quarter after having initially reported growth over 2 percent. The rate-boost-obsessed Bank of Japan finally decided to stop raising rates, and, to add to the complexity of the picture, Japan's relatively new prime minister Shinzo Abe resigned, unable to provide the leadership sorely needed in a nation lacking economic and political direction.
  • Topic: Economics, International Trade and Finance, Markets
  • Political Geography: United States, Japan, United Kingdom, England
  • Author: John H. Makin
  • Publication Date: 09-2007
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: During a 10:00 a.m. conference call on August 17, 2007, Federal Reserve vice chairman Donald Kohn and New York Federal Reserve president Timothy Geithner were urging Citicorp chief executive Chuck Prince and his fellow big bank CEOs to use the Fed's discount window, which is set up to alleviate liquidity pressures on individual banks or on the banking system as a whole. Prince, the head of the world's largest bank (Or is it the second largest? No one really knows since bank balance sheets are so full of securities that cannot be priced.) may have been wishing that he had not chosen to offer a chillingly clear characterization of the global financial system a little more than five weeks earlier in a Financial Times interview on July 9, three weeks before the global credit markets began to seize up.
  • Topic: Economics, International Trade and Finance, Markets
  • Political Geography: United States
  • Author: John H. Makin
  • Publication Date: 08-2007
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: In a July 9 interview in Tokyo with the Financial Times about the surging, liquidity-driven financial sector, Citigroup chief executive Chuck Prince characterized the situation in global financial markets more insightfully than some investors might have wished: “When the music stops, in terms of liquidity, things will get complicated. But as long as the music is playing, you've got to get up and dance. We're still dancing.” Prince elaborated further, saying that (as the article paraphrased it) “the way big Wall Street banks and hedge funds had picked up troubled subprime mortgage lenders was an example of how 'liquidity rushes in' to fill the gap as others spot a buying opportunity.”
  • Topic: Economics, International Trade and Finance, Markets
  • Political Geography: United States, Tokyo
  • Author: John H. Makin
  • Publication Date: 07-2007
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: The bond “conundrum” that Alan Greenspan spoke of toward the end of his tenure at the Federal Reserve is disappearing. Chairman Greenspan was drawing attention to unusually low longterm interest rates worldwide on bonds.1 More recently, however, in less than a month interest rates on U.S. ten-year notes have risen by 60 basis points with no change in expected inflation. The shift is all the more unusual because of its abruptness and relative magnitude: in statistical terms, it is a rise of three standard deviations in “real” (inflation-adjusted) rates in a market that has been quiet over the past five years. Moreover, the few “surprise” moves since the tech-stock bubble burst in 2000 have mostly been in a downward direction.
  • Topic: Economics, International Trade and Finance, Markets
  • Political Geography: United States
  • Author: John H. Makin
  • Publication Date: 06-2007
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: The American consumer is a very persistent spending machine. It is American consumption growth running at higher than 4 percent annualized— well above its long-term average—that has kept the economy comfortably out of recession for the past six months as the housing slowdown has subtracted more than a percentage point from growth. Even with a substantial additional drag on the U.S. economy from other areas—inventory liquidation, weakening net exports, and rapidly rising gasoline prices—the American consumer's spending surge has still been enough to keep GDP growth in positive territory.
  • Topic: Economics, International Trade and Finance, Markets
  • Political Geography: United States, America
  • Author: John H. Makin
  • Publication Date: 05-2007
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: On Friday, April 13, the Wall Street Journal's lead story on the unlucky U.S. economy was “Economy Enemy No. 1: Soft Capital Spending.” The nation's leading business newspaper was acknowledging a six-month slowdown in capital spending that has, along with the drag from the housing sector, been lowering U.S. growth.
  • Topic: Economics, International Trade and Finance, Markets
  • Political Geography: United States
  • Author: John H. Makin
  • Publication Date: 03-2007
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: To the dismay and amazement of optimistic market players, not to mention Federal Reserve chairman Ben Bernanke, early in March former Fed chairman Alan Greenspan publicly assessed the probability of a recession this year to be one in three. This was a shock to those who had been carefully avoiding use of the “r word” while intensifying problems in the subprime mortgage market heralded the news that the housing correction, which had been declared “over” in January, was instead moving into a second, more intense, and unpleasant phase. Weaker investment (capital spending was actually a drag on fourth quarter growth) and an 8.7 percent drop in January durable goods orders further undercut hope for sustained general growth. The Fed's own economic outlook has looked to firmer capital spending as part of an economic recovery scenario.
  • Topic: Development, Economics, Government, Markets
  • Author: John H. Makin
  • Publication Date: 02-2007
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: The slowdown in the housing sector that began early in 2006 subtracted over a percentage point from GDP growth during the second half of last year. Now, in 2007, analysts have declared that the worst of the housing slowdown is over. However, early in February, more serious problems emerged in the subprime mortgage market, the rapid growth of which supported the later stages of the housing boom in 2005 and 2006. Subprime mortgages are risky loans to weak borrowers who usually have to borrow the down payment on a home purchase, leaving them with mortgage obligations equal to 100 percent of the purchase price.
  • Topic: Development, Economics, Markets
  • Author: John H. Makin
  • Publication Date: 01-2007
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: Top economic policymakers from China and the United States met in Beijing in mid-December 2006 for the first round of what has been called the U.S.-China Strategic Economic Dialogue (SED). There is a lot more at stake than the level of China's currency when the world's premier economic sprinter—China—meets with the world's premier economic long-distance runner—America. The fundamental issue at hand is the creation and preservation of wealth of two nations, each of which has much to teach the other. The right outcome from the dialogue would provide a substantial boost to the global economy in coming years, while the wrong outcome would threaten the continuation of global prosperity.
  • Topic: International Relations, Economics
  • Political Geography: United States, China, Beijing, Asia
  • Author: Yegor Gaidar
  • Publication Date: 04-2007
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: In the summer of 2002, after the Russian government introduced the flat income tax, completed fiscal reforms, created the Stabilization Fund, and introduced land reform in Russia, I had a premonition that the window of opportunity for further reforms would be closing for a number of years. I was correct in my prediction.
  • Topic: Economics, Energy Policy, International Trade and Finance
  • Political Geography: Russia, Europe, Asia, Soviet Union
  • Author: Kevin A. Hassett
  • Publication Date: 03-2007
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: The financial-aid system for college students is in a state of disarray. Federal aid and programs administered through the tax code are bureaucratic and include unfair provisions. Congress should stop using programs with a track record of little success and start using those that will give students the opportunities—and financial aid—they deserve.
  • Topic: International Relations, Economics, Education, Government
  • Author: John E. Calfee
  • Publication Date: 03-2007
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: Looming on the horizon is a political battle over direct-to-consumer advertising (DTCA) of prescription drugs.The Prescription Drug User Fee Act (PDUFA) is up for renewal, as it has been every five years since 1997. First passed in 1992, PDUFA authorizes the Food and Drug Administration (FDA) to collect fees from pharmaceutical companies submitting new drugs for approval, as well as a separate annual fee for each prescription drug on the market. (Before PDUFA, taxpayers alone funded FDA product reviews.) Because user fees cover most salaries of FDA drug regulators, the pharmaceutical industry, Congressional leaders, and the FDA itself all support renewal. But this time around, Congress is expected to tack on provisions dealing with drug safety and other matters, especially DTCA.
  • Topic: Civil Society, Economics, Government, Markets
  • Author: Michael Rubin
  • Publication Date: 03-2007
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: The following article is the second of two installments by Michael Rubin in AEI's On the Issues series. The two articles originally appeared as a review essay in the Spring 2007 edition of Middle Eastern Quarterly.
  • Topic: Civil Society, Development, Education
  • Political Geography: Iraq, Middle East
  • Author: Michael Rubin
  • Publication Date: 03-2007
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: The following article is the first of two installments by Michael Rubin in AEI's On the Issues series. The two articles originally appeared as a review essay in the Spring 2007 edition of Middle Eastern Quarterly.
  • Topic: Civil Society, Development, Education
  • Political Geography: Iraq, Middle East
  • Author: Charles Murray
  • Publication Date: 02-2007
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: In January, W. H. Brady Scholar Charles Murray stepped back from current education debates about reauthorization of the 2002 No Child Left Behind Act and education funding in the president's budget to ask more fundamental questions about the goals that should shape American education in the future. This On the Issues is adapted from essays published in the Wall Street Journal on January 16, 17, and 18, 2007.
  • Topic: Development, Education, Government
  • Political Geography: United States, America
  • Author: Kenneth P. Green, Steven F. Hayward
  • Publication Date: 02-2007
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: On February 2, an AEI research project on climate-change policy that we have been organizing was the target of a journalistic hit piece in Britain's largest left-wing newspaper, the Guardian. The article's allegation—that we tried to bribe scientists to criticize the work of the United Nations Intergovernmental Panel on Climate Change (IPCC)—is easy to refute. More troubling than the article is the growing worldwide effort to silence anyone with doubts about the catastrophic warming scenario that Al Gore and other climate extremists are putting forth.
  • Topic: International Relations, Environment, United Nations
  • Political Geography: Britain, United States
  • Author: Frederick M. Hess
  • Publication Date: 01-2007
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: Race-based hiring practices are commonplace in today's colleges and universities. Not even our country's highest court has been able to put a stop to them. What is needed to end them are determined efforts by alumni and trustees, strong voices within universities, and an engaged public.
  • Topic: Demographics, Development, Economics, Education
  • Author: Frederick M. Hess
  • Publication Date: 01-2007
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: The No Child Left Behind Act (NCLB) is due for reauthorization in 2007. In the nick of time, a bipartisan conventional wisdom has emerged that conveniently excuses the shortcomings of this awkwardly assembled law.
  • Topic: Civil Society, Development, Education, Politics
  • Author: Samuel Thernstrom, Lee Lane
  • Publication Date: 01-2007
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: President George W. Bush was widely expected to propose ambitious new initiatives to control greenhouse gas emissions in the State of the Union address on January 23. The week before the speech, his top environmental advisor told a Washington Post columnist that a carbon tax or cap-and-trade system would be “the most elegant” solution to climate change, raising expectations that a proposal along those lines might be forthcoming. In the end, however, the president proposed a remarkably modest (and poorly conceived) initiative to cut gasoline consumption by 20 percent in the next ten years. This was an important lost opportunity for leadership at a crucial juncture.
  • Topic: Development, Environment, Government, Politics
  • Political Geography: Washington
  • Author: Thomas Donnelly, Colin Monaghan
  • Publication Date: 03-2007
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: The White House has recently taken important steps to ensure that the tenets of the Bush Doctrine endure beyond the end of President George W. Bush's administration, including a new strategy in Iraq and an increase in the size of U.S. land forces. But as time grows short, the president needs to attend closely to three matters. The first of these—a surge in U.S. efforts in Afghanistan—was discussed in the February 2007 edition of National Security Outlook, is a need as obvious and pressing as Iraq and an important factor in the urgency of rebuilding land forces, especially the Army. The second and third factors are less frequently discussed but essential for the long-term viability of the Bush Doctrine and the continuation of the Pax Americana: articulating a strategy for the “Long War” in the greater Middle East and devising a genuinely global response to the rise of China. This issue of National Security Outlook is devoted to the second factor, the strategy for winning the Long War in the Middle East.
  • Topic: Government, National Security, War
  • Political Geography: Afghanistan, United States, China, Iraq, America, Middle East, Asia
  • Author: Thomas Donnelly
  • Publication Date: 02-2007
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: With the recent announcements of a new strategy for Iraq and a commitment to begin increasing the size of U.S. land forces, the White House has taken two important steps to ensure that the tenets of the Bush Doctrine endure beyond the end of President George W. Bush's administration. Since 9/11 and indeed since the beginning of this administration, strategy has been made by an odd combination of ad hoc improvisation and expansive rhetoric. The day-to-day business of fitting means to ends and filling in the policy blanks has either been delegated to subordinates, left to the bureaucracy, or put in the “too hard” box. As time grows short, Bush needs to attend closely to three further matters. The first is as obvious and pressing as Iraq and an important factor in the need to rebuild land forces, especially the Army: a surge in U.S. efforts in Afghanistan. The second and third factors are less frequently discussed but essential for the long-term viability of the Bush Doctrine and the continuity of the Pax Americana: articulate a strategy for the “long war” in the greater Middle East and devise a genuinely global response to the rise of China. This issue of National Security Outlook begins a series devoted to these three measures of the enduring meaning of the Bush Doctrine.
  • Topic: International Relations, Government, National Security
  • Political Geography: Afghanistan, United States, China, Iraq, America, Asia
  • Author: Leon Aron
  • Publication Date: 05-2007
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: Russian president Vladimir Putin's term expires in March 2008. Despite the propaganda barrage designed to persuade everyone of an orderly change of government, the coming Russian presidential succession is far from a done deal. The stability and legitimacy that flow from democratic arrangements are compromised when these arrangements are weakened, as happened under Putin, ushering in uncertainty and risk.
  • Topic: Corruption, Politics
  • Political Geography: Russia, Europe, Eastern Europe, Asia
  • Author: Leon Aron
  • Publication Date: 05-2007
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: Criticizing preceding regimes is a popular pastime of Russian leaders. But in denouncing the “chaos of the 1990s,” the Vladimir Putin regime seems to have an additional purpose: to defame the idea of liberty itself. Part I of this two-part Russian Outlook examines the claim that the revolution was entirely responsible for Russia's economic woes in the 1990s. Part II will take issue with the assertion that the Yeltsin years brought nothing but “chaos.”
  • Topic: Corruption, Democratization, Politics
  • Political Geography: Russia, Eastern Europe
  • Author: Leon Aron
  • Publication Date: 05-2007
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: Part I of this Russian Outlook dealt with what might be called the errors of commission, or false attribution, in the “chaos-of-the-1990s” stereotype, which became a major theme of the Putin Kremlin's propaganda. The economic crisis of that era, mostly inherited from the decaying Soviet economy, was laid at the revolutionary regime's door. Yet the “chaos” legend also contains errors of omission, for, on closer inspection, there was a great deal in the 1990s besides the alleged “chaos.”
  • Topic: Corruption, Democratization, Politics
  • Political Geography: Russia, Eastern Europe
  • Author: Leon Aron
  • Publication Date: 01-2007
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: The twentieth anniversary of the beginning of the Russian revolution (1987–91) is a fitting occasion to assess the true scale and the impact of the national spiritual liberation known as glasnost, and to put it into a broader context of the history of ideas and their role in revolutions. Such an examination is doubly useful today, when a steady stream of Kremlin-sponsored propaganda seeks to distort and minimize what glasnost has wrought.
  • Topic: Development, Government, Nationalism
  • Political Geography: Russia, Europe, Asia
  • Author: Robert F. Noreiga
  • Publication Date: 12-2006
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: While the world's attention is focused on a struggling Iraq and a rising China, a battle for the heart and soul of the Americas is being waged closer to home. A simplistic account might describe this confrontation as a tug of war between U.S. president George W. Bush's vision and that of his self-appointed nemesis, Venezuelan president Hugo Chávez. Equally misleading are characterizations that describe the showdown as one between left and right, rich and poor, north and south. But this is not a battle between two powerful leaders or between ideologies of the left and right. The contest being waged in the Western Hemisphere is about democracy itself: can it deliver the goods for impatient publics? On one side are leaders from the left and right who see democratic institutions and the rule of law as indispensable to prosperity and liberty. On the other are those who treat democracy as an inconvenience and see free markets as a threat.
  • Topic: Democratization, Development, Politics
  • Political Geography: China, Asia
  • Author: Robert F. Noriega
  • Publication Date: 10-2006
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: As Nicaraguans prepare to vote in their country's presidential election on November 5, Sandinista dictator Daniel Ortega is leading in the polls against a divided field. If Ortega were to regain the presidency, the reversal of the democratic trend in Central America would be devastating.
  • Topic: Democratization, Markets, Politics
  • Political Geography: Central America
  • Author: Roger F. Noriega
  • Publication Date: 02-2006
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: "America is addicted to oil," President George W. Bush told the nation in his January 31 State of the Union address, "which is often imported from unstable parts of the world." Spelling out a plan for using technology "to develop cleaner, cheaper, more reliable alternative energy sources," the president set a worthy goal to "make our dependence on Middle Eastern oil a thing of the past." Although the president's long-term vision is of a country less dependent on petroleum, a near-term solution for being less reliant on "unstable" sources of energy can be found in encouraging resource-rich nations in the Western Hemisphere to adopt sound policies for developing their oil and gas industries. Without a concerted effort right now engaging government and industry, however, we may witness some countries with vast potential embrace statist models that squander their natural resources and make them less reliable and less stable partners.
  • Topic: Economics, Energy Policy, Environment
  • Political Geography: United States, America
  • Author: Roger F. Noriega
  • Publication Date: 01-2006
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: The United States has gone around the world seeking to address challenges to our security and prosperity, but a significant opportunity is readily available closer to home. Helping this country's fastest growing trade partners and top energy suppliers right here in the Western hemisphere achieve and institutionalize open, competitive economies will produce a century's worth of prosperity for the United States and its natural partners. Like-minded governments in the Americas should work together to launch an "Opportunity Partnership" that would sustain a reform agenda and alleviate the region's chronic poverty by empowering the poor both economically and politically.
  • Topic: International Relations, International Cooperation
  • Political Geography: South America, North America
  • Author: John H. Makin
  • Publication Date: 12-2006
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: A weak housing sector has accompanied every American recession since 1965, but not every episode of housing weakness has accompanied a recession. An annual drop in the growth rate of residential investment (a good measure of homebuilding activity) of more than 10 percent has coincided with a recession five of the seven times it has occurred since 1965. (In 1967 and in 1995, declines in residential investment occurred without a recession.) A significant drop in residential investment therefore appears to be a necessary condition, but not a sufficient condition, for a U.S. recession.
  • Topic: Economics, Human Welfare, Markets
  • Political Geography: United States, America
  • Author: John H. Makin
  • Publication Date: 11-2006
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: The U.S. economy has slowed to a level below its trend growth rate during the second half of 2006. Trend growth, the rate that can be sustained over time without rising inflation, is probably about 3 percent, having been reduced by a quarter of a percentage point by weaker productivity data. As has often been the case over the past five years, the slowdown itself has set into motion market adjustments that may mitigate or even reverse it. Since August, interest rates on benchmark tenyear treasuries have dropped by about 60 basis points. That reduction, coupled with a stock market that is rising in part because of lower interest rates, has caused an easing of financial conditions equal to nearly 100 basis points since late June on the Goldman Sachs Financial Conditions Index. Meanwhile, since August, the price of oil has dropped by about $18 per barrel—which, if sustained, would be enough to add about 0.7 percentage points to U.S. growth over the next year.
  • Topic: Development, Economics, Markets
  • Political Geography: United States, America
  • Author: John H. Makin
  • Publication Date: 05-2006
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: The new Federal Reserve chairman, Ben Bernanke, is making what cynics would call a serious mistake: he is being honest with the markets. The Fed is uncertain about the future path of U.S. growth and inflation. The most basic tenet of the theory of economic policy is that in circumstances of elevated uncertainty, policymakers should do less. Therefore, in his April 27 testimony to the Joint Economic Committee of Congress, Bernanke suggested that the Fed might start doing less: Even if in the Committees judgment the risks to its objectives are not entirely balanced, at some point in the future the Committee may decide to take no action at one or more meetings in the interest of allowing more time to receive information relevant to the outlook [emphasis added]. The new Federal Reserve chairman, Ben Bernanke, is making what cynics would call a serious mistake: he is being honest with the markets. The Fed is uncertain about the future path of U.S. growth and inflation. The most basic tenet of the theory of economic policy is that in circumstances of elevated uncertainty, policymakers should do less. Therefore, in his April 27 testimony to the Joint Economic Committee of Congress, Bernanke suggested that the Fed might start doing less: Even if in the Committees judgment the risks to its objectives are not entirely balanced, at some point in the future the Committee may decide to take no action at one or more meetings in the interest of allowing more time to receive information relevant to the outlook [emphasis added]. After its May 10 meeting, the Feds Open Market Committee reinforced the message of more uncertainty about the direction of the economy, saying: The Committee judges that some further policy firming may yet be needed to address inflation risks but emphasizes that the extent and timing of any such firming will depend importantly on the evolution of the economic outlook as implied by incoming information [emphasis added]. Chairman Bernanke and virtually all of his colleagues on the Open Market Committee have made it clear, most forcefully in their May 10 statement, that they view the Federal Reserves most important mandated objective as one of maintaining low and stable inflation. A glance at any long-run chart of U.S. growth and inflation data clearly demonstrates the basis for this view. Since the early 1980s, when inflation was reduced and held to low and stable levels, U.S. economic performance has improved markedly. Growth has been higher and steadier; productivity growth picked up especially after 1995 and has remained higher ever since. Virtually all macroeconomic data have stabilized in a way that has reduced the duration and severity of recessions, so that the last recession (in 2001) was barely detectable. The Great Moderation is an often-used term that describes policymakers pride and satisfaction with the beneficial results of bringing down inflation and holding it at low levels.
  • Topic: Economics, Government, Markets, Monetary Policy
  • Political Geography: United States
  • Author: John H. Makin
  • Publication Date: 05-2006
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: In their April 21 press release following their spring meeting in Washington, D.C., the G7 finance ministers and central bank governors added an important sentence to their usual bland statement that exchange rates should reflect economic fundamentals: Greater exchange rate flexibility is desirable in emerging economies with large current account surpluses, especially China, for necessary adjustments to occur. In their April 21 press release following their spring meeting in Washington, D.C., the G7 finance ministers and central bank governors added an important sentence to their usual bland statement that exchange rates should reflect economic fundamentals: Greater exchange rate flexibility is desirable in emerging economies with large current account surpluses, especially China, for necessary adjustments to occur. The G7, significantly, also called for an increased role for the International Monetary Fund (IMF) to help countries, including those in the G7 but also China and others in emerging Asia, meet the macroeconomic and financial policy challenge of globalization. Specifically, the G7 supported the strengthening of IMF surveillance, including through increased emphasis on the consistency of exchange rate policies with domestic policies and a market-based international monetary system and on the spillover effects of domestic policies on other countries. The G7s endorsement of greater exchange-rate flexibility and of an enhanced IMF role in implementing it is important. The IMF, having been founded after World War II to maintain stable exchange rates among major economies, has become an advocate on behalf of the major economies of global exchange-rate flexibility. The lesson regarding the need for G7 currency flexibility was learned after Americas August 1971 abandonment of fixed exchange rates, which was followed by a decade of adjustments to higher oil prices that would have wreaked havoc under fixed exchange rates. The lesson for needed currency flexibility in emerging markets was learned after the disastrous attempt, fostered in part by the IMF, to impose fixed exchange rates during the Asian and Russian crises of 1997 and 1998, which prolonged and exacerbated the market gyrations caused by the crises. Sadly, China response to the G7-IMF call for greater currency flexibility has been both negative and misguided. China's foolishly insouciant attitude, captured in a comment by Zhou Xiao-chuan, governor of the Peoples Bank of China, carries with it serious risks both for China and for the world economy. Zhous remark was quoted on April 24 in the Wall Street Journal: [T]he speed of moving forward (on yuan appreciation) is OK. Its good for China and welcomed by many other countries. China's currency has appreciated only 1.2 percent since its initial 2.1 percent revaluation last July 21. That is less than OK. The total 3.3 percent revaluation against the dollar really represents no adjustment at all in view of the 1 to 2 percent inflation differential (lower in China) that has persisted between the United States and China over the past two years. If China had allowed prices to rise instead of mandating caps on prices of important commodities like gasoline, there would be less pressure for the yuan to rise in value. Both the intervention to cap the yuans appreciation and the capping of domestic prices are building up potentially disruptive inflation pressure inside China, as we shall see below. The most dangerous aspect of China's increased efforts to prevent yuan appreciation, as measured by accelerating reserve accumulation over the past year, is the rising pool of liquidity inside China that has resulted. The level of excess reserves in Chinese banks is now larger, relative to GDP, than the level of excess reserves built up in Japan from 2001 to 2005 during the years of a prolonged, desperate struggle against deflation. China's currency undervaluation, coupled with the massive liquidity buildup in its banking system, has resulted in excessive investment in China's state enterprises that have close traditional ties with the liquidity-sodden banks. The usual Chinese response to excess reserves has been to boost reserve requirements for its banks. But to absorb the huge pool of excess reserves now in place, reserve requirements would have to be boosted by 5 percentage points to 12.5 per-cent, going far beyond previous moves of 0.5 to 1 percentage point, and far beyond what China's shaky, insolvent banks could endure. When the Peoples Bank of China boosted its one-year benchmark lending rate on April 26 by 27 basis points (to 5.85 percent), it took a tiny step that will do little to tighten China's monetary stance.
  • Topic: Development, Economics, International Trade and Finance
  • Political Geography: United States, China, Washington
  • Author: Peter J. Wallison
  • Publication Date: 05-2006
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: At the Federal Deposit Insurance Corporation's (FDIC) recent hearings on Wal-Mart's application to acquire a bank-like institution in Utah that can accept FDIC-insured deposits, a representative of the National Association of Realtors testified that such an acquisition would violate the principle separating banking and commerce. No doubt the banks savored this rare support from the realtors, but what they may not have realized is that the joke is on them.
  • Topic: Civil Society, Economics, Government, Politics
  • Author: James Q. Wilson
  • Publication Date: 03-2006
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: When South Dakota passed a law banning all abortions save those that threaten the physical health of the mother, opponents of abortion were cheered and defenders of it outraged. I think both sides were mistaken.
  • Topic: Civil Society, Government, Health, Human Rights
  • Author: John H. Makin
  • Publication Date: 03-2006
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: Concerns over deflation have dominated monetary policy during the past several years in Japan, and also in the United States as recently as 2003. As a result, the Bank of Japan and the Federal Reserve have been highly accommodative. In Japan, this took the form of a zero interest rate. In the U.S. context, it was manifest in rates at well below normal yardsticks, such as nominal GDP growth that would call for U.S. policy interest rates close to 6 percent rather than at current levels below 5 percent. Unusually accommodative monetary policies and the substantial liquidity flows they have entailed have boosted asset values and compressed risk spreads. Consequently, demand growth has persisted at high levels for long enough to cause modestly higher inflation. The time has come for tighter monetary policy, and central banks in the United States, Europe, and Japan have all begun to apply it.
  • Topic: Economics, International Trade and Finance
  • Political Geography: United States, Japan, Europe, Israel, East Asia
  • Author: John H. Makin
  • Publication Date: 02-2006
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: In August 2000, with the Japanese growth rate holding above 2 percent, the Bank of Japan decided to initiate an end to the zero interest rate policy that it had initiated in March 1999. This step was taken despite the existence of modest deflation, indicated by readings of minus 0.2 to minus 0.5 percent on various measures of inflation. At that time, no central bank had thought seriously about deflation as a threat since the depression of the 1930s.
  • Topic: Development, Economics, International Trade and Finance
  • Political Geography: Japan, Israel, East Asia
  • Author: John H. Makin
  • Publication Date: 01-2006
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: On Tuesday, January 18, the yield on fifty-year inflation-protected U.K. government bonds (what the British call "indexed-linked gilts") dropped to 0.38 percent, about one-seventh the historical average of just over 2.6 percent for such debt instruments. Just a few months earlier, that yield had been over 1 percent, still extraordinarily low by historical standards, and especially low in an economy that has experienced fifty-three consecutive quarters of positive growth. A yield drop from 1 percent to 0.38 percent on a fifty-year bond corresponds to a 30 percent rise in its price over a period of just three months. That is an annual return of over 100 percent, much higher than the 13 percent annual increase in U.S. house prices at midyear and the 20 to 30 percent gains seen in the stock market before the March 2000 crash. The asset bubble has spread to long-term government bonds, especially those with inflation protection. What is going on here?
  • Topic: Economics, Government, International Trade and Finance
  • Political Geography: United States, United Kingdom, Europe
  • Author: Eliot A. Cohen
  • Publication Date: 12-2006
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: There is little realism in the report of the Iraq Study Group, a consensus group dominated by so-called foreign policy realists. It offers diplomatic pablum instead of serious discussion of what has gone wrong in Iraq. Our difficulties in Iraq are not a result of having the wrong strategy, but of failing to implement the choices we have made.
  • Topic: International Relations, Foreign Policy, War
  • Political Geography: Iraq, Middle East
  • Author: Charles Murray
  • Publication Date: 12-2006
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: The twenty-fifth anniversary of the Atlas Foundation provided Charles Murray with an occasion to consider the influence of classical liberal ideas on policy and also to speculate on what lies ahead.
  • Topic: Development, Economics, Government
  • Author: Allan H. Meltzer
  • Publication Date: 11-2006
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: On November 16, eminent economist Milton Friedman passed away. Friedman made unparalleled contributions to free-market economics, demonstrating in Capitalism and Freedom the close relationship of free enterprise to political liberty. His philosophy has been extraordinarily influential regarding social and economic policies in governments around the world.
  • Topic: Development, Economics, Markets, Politics
  • Author: Dan Blumenthal, Gary J. Schmitt
  • Publication Date: 10-2006
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: The recent election of Shinzo Abe to the premiership of Japan has raised a host of issues about the direction in which Japan is headed. Conventional wisdom holds that Abe will lead the country in an increasingly nationalistic course, but Abe's nationalism is democratic, and one that should be welcomed by the United States.
  • Topic: International Relations, Nationalism, Politics
  • Political Geography: United States, Japan, Israel
  • Author: Newt Gingrich
  • Publication Date: 10-2006
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: We meet five years after the initial attack on American soil. However we should note we come together twenty-seven years after what Mark Bowden in Guests of the Ayatollah called “the first battle in America's war with militant Islam”—the seizure of the American embassy and the 444-day hostage taking of fifty-two Americans in total violation of international law.
  • Topic: International Relations, Politics, Terrorism, War
  • Political Geography: America
  • Author: John Yoo
  • Publication Date: 09-2006
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: Accusations of imperial ambitions have flooded the political landscape as President George W. Bush has used his executive powers to improve counterterror strategies, but is Congressional anxiety warranted? Or is a stronger executive branch characteristic of an America at war and symbolic of how the Constitution intended presidential power to be employed?
  • Topic: International Relations, Politics, Terrorism, War
  • Political Geography: America
  • Author: Nicholas Eberstadt
  • Publication Date: 09-2006
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: Without a clearer understanding of the serious flaws in the government's official measure of poverty, most initiatives aimed at reducing poverty in the United States will be needlessly ineffective. New measures that take into account contemporary lifestyles and the dynamic U.S. economy will be more useful in helping the poor.
  • Topic: Economics, Government, Poverty
  • Political Geography: United States
  • Author: David Frum
  • Publication Date: 08-2006
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: The war on terrorism demands that we focus not only on terrorists abroad, but also those who—by making excuses for them—aid and abet terrorism at home.
  • Topic: Defense Policy, Terrorism, War
  • Political Geography: Europe
  • Author: James Q. Wilson
  • Publication Date: 08-2006
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: When President George W. Bush said that America hopes to spread democracy to all the world, he was echoing a sentiment many people support. Though Americans do not put “extending democracy” near the top of their list of foreign policy objectives (preventing terrorism is their chief goal), few would deny that if popular rule is extended it would improve lives around the world. Democracy, of course, means rule by the people. But the devil is in the details. By one count, the number of democracies quintupled in the second half of the twentieth century, but there are freedom- loving and freedom-disdaining democracies. Fareed Zakaria calls the latter “illiberal democracies.” Among them are Kazakhstan, Pakistan, Ukraine, and Venezuela.
  • Topic: International Relations, Democratization, Government
  • Political Geography: Pakistan, United States, Ukraine, Kazakhstan, Venezuela
  • Author: James Q. Wilson
  • Publication Date: 08-2006
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: Federal district court Judge Anna Diggs Taylor has ruled that the warrantless interception of telephone and Internet calls between a foreign agent and American persons is illegal and unconstitutional. It is possible that she is right about the illegality, but she is almost surely wrong that it is unconstitutional. The government has appealed this decision to the Sixth Circuit. No one can say what it will decide, although other appeals courts have tolerated such surveillance. Ultimately the Supreme Court will have to decide the matter. The Constitutional arguments against the surveillance are unpersuasive. A Washington Post editorial dismissed them as “throat clearing.” Judge Taylor refers to the free speech provision of the First Amendment but fails to explain how listening to a conversation or reading e-mail abridges anyone's right to speak. Taken literally, a Constitutional ban on intercepts would make it impossible to overhear the mafia plotting murders or business executives fixing prices.
  • Topic: Civil Society, Human Rights, Politics
  • Political Geography: United States, Washington
  • Author: Douglas J. Besharov
  • Publication Date: 08-2006
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: It has been nearly ten years since President Bill Clinton signed the landmark 1996 welfare reform law. The anniversary has been the occasion for various news stories and opinion pieces, most of them praising the law's success in reducing welfare dependency. And it is true: welfare caseloads have fallen an astounding 60 percent since reform efforts began. But even as a strong supporter of welfare reform, I find it difficult to muster unqualified enthusiasm for the law and how it has been implemented.
  • Topic: Civil Society, Development, Economics, Human Welfare
  • Author: Joshua Muravchik
  • Publication Date: 07-2006
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: No sooner had Israel raised its hand in self- defense when Finland, speaking as the rotating president of the European Union, denounced it for “the disproportionate use of force.” This position, echoed by France, Spain, the United Nations, and others, is wrong legally, morally, and strategically. From a legal standpoint, Israel is the victim of multiple unprovoked aggressions. It withdrew entirely from Lebanon in 2000 and from Gaza in 2005. (Both of these occupations had come about as acts of self-defense: the former against rocket fire from Lebanon in 1982, and the latter against a war of annihilation declared by Egypt in 1967.) From the time of its withdrawal from Gaza, not a single day had passed without rockets being fired into Israel. Now from the north as well as the south, Israel finds hundreds of rockets being fired across its border. Even if these were aimed at military installations, it would be a clear-cut act of war. To make it worse, these rockets are aimed randomly at cities and other civilian population centers, making them not only acts of war but war crime.
  • Topic: International Relations, Defense Policy
  • Political Geography: Europe, Middle East, Israel, Finland, France, Gaza, Spain, Lebanon, Egypt
  • Author: Michael Rubin
  • Publication Date: 07-2006
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: After Hamas kidnapped nineteen-year-old Corporal Gilad Shalit on June 25, Israeli forces launched an assault on Gaza to win his release. Arab condemnation was swift. Saudi Arabia's pro- government al-Jazira daily called Israel “a society of terrorists.” Egypt's state-controlled al-Gumhuriyah condemned Israel's “heinous crimes” in Gaza. Following a July 8 meeting in Tehran, foreign ministers from countries neighboring Iraq denounced the “brutal Israeli attacks.”
  • Topic: International Relations, Government
  • Political Geography: Iran, Middle East, Israel, Tehran, Gaza, Arab Countries, Saudi Arabia, Egypt
  • Author: Michael Rubin
  • Publication Date: 07-2006
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: As fighting continues between Israel and Hezbollah, both the British government and the United Nations have called for the dispatch of an international peacekeeping mission to southern Lebanon. “The only way we are going to have a cessation of violence is if we have an international force deployed,” British prime minister Tony Blair said recently. UN Secretary General Kofi Annan added that such a force is “essential.” But with its long and troubled history in the region, the idea of sending a peacekeeping force should be dead on arrival.
  • Topic: International Relations, Peace Studies, United Nations
  • Political Geography: United Kingdom, Middle East, Israel, Lebanon
  • Author: Vance Serchuk
  • Publication Date: 07-2006
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: When rioting sparked by a fatal traffic accident involving the U.S. military suddenly broke out in Kabul in May, most in the city were taken by surprise. Less shocking was the response of the Afghan National Police (ANP) to the unrest. Rather than dispersing the mobs and restoring order, Kabul's cops were reported fleeing their posts and, in some cases, joining the looters. “The reaction of our police was really shameful,” acknowledged Jawed Ludin, chief of staff to President Hamid Karzai. Unfortunately, the sorry performance of the ANP was not an isolated event, but a reflection of a much bigger problem. Nearly five years since the ouster of the Taliban and more than three since the fall of Saddam, the Bush administration has repeatedly stumbled in its efforts to create effective foreign police forces. In marked contrast to the army-building efforts in Iraq and Afghanistan, which have begun to yield encouraging results, the indigenous police in both countries appear stuck in a transition to nowhere, slaughtered by insurgents and infiltrated by militias and warlords.
  • Topic: Government, Terrorism, War
  • Political Geography: Afghanistan, United States, Iraq, Middle East, Taliban, Kabul
  • Author: Michael A. Ledeen
  • Publication Date: 07-2006
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: September 11 happened when Osama bin Laden looked at us and thought we were ready to be had. We were politically divided and squabbling over everything. We clearly were not prepared to take casualties in direct combat. The newly elected president seemed unable to make a tough decision. And so bin Laden attacked, expecting to deliver a decisive blow to our national will, expecting that we would turn tail and run as we had in Somalia and that he would then be free to concentrate his energies on the defeat of local apostates, the creation of his caliphate, and the organization of Muslim revenge for the catastrophes of past centuries. Within a few months he was driven out of Afghanistan, his organization was shattered, the Arab street he had hoped to mobilize was silenced by the shock and awe of the total victory of the Americans, and he became an instrument of forces greater than himself. If he still lives, he is the servant of the Shiite mullahs, making propaganda movies and audiotapes to bolster the morale of the constantly shrinking number of his admirers, while the mullahs order his followers to martyr themselves against Iraqi civilians.
  • Topic: International Relations, Terrorism, War
  • Political Geography: Afghanistan, Iraq, America, Middle East
  • Author: Peter J. Wallison
  • Publication Date: 03-2006
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: In December, the London Stock Exchange celebrated a record year for foreign company new issues, with 129 new listings by companies from twenty-nine different countries. In contrast, the New York Stock Exchange registered a net gain of six foreign listings (a gain of nineteen and a loss of thirteen) in 2005, and NASDAQ gained a net of fourteen. According to a press report by the London Stock Exchange on its success, “about 38 per cent of the international companies surveyed said they had considered floating in the United States. Of those, 90 per cent said the onerous demands of the new Sarbanes-Oxley corporate governance law had made London listing more attractive.” By now, it is well-known what harm Sarbanes-Oxley has done to the attractiveness of the U.S. securities markets, but what is not well- known is that the lack of resources available to a relatively obscure accounting group—engaged in the development of a technical-sounding disclosure system called XBRL—may also threaten not only the current primacy of the U.S. financial markets, but also the future competitiveness of U.S. companies.
  • Topic: Economics, Emerging Markets, International Trade and Finance
  • Political Geography: United States, New York, London
  • Author: Michael Rubin
  • Publication Date: 01-2006
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: On February 2, 2006, the International Atomic Energy Agency will meet in Vienna to discuss the nuclear crisis in Iran and, in all likelihood, refer Iran to the United Nations Security Council for being in breach of the Nuclear Non-Proliferation Treaty's safeguards agreement. Such a referral will mark a turning point in a decade-long saga. Europe's engagement with Iran has failed. The United States and its European allies have been resolute in their condemnation of the Iranian government decision to resume uranium enrichment. In contrast to previous diplomatic impasses with Tehran, neither Washington nor its European allies appear willing to make further concessions. On January 23, U.S. secretary of state Condoleezza Rice said, “I don't see much room for further discussion in any format [with Iran].” At a January 13, 2006, press conference with German chancellor Angela Merkel, George W. Bush condemned Iran. “Iran, armed with a nuclear weapon, poses a grave threat to the security of the world,” Mr. Bush said. “We will not be intimidated,” Ms. Merkel added. Already, though, there has been one casualty of the diplomatic crisis: the European Union's policy of engagement.
  • Topic: International Relations, Nuclear Weapons, United Nations
  • Political Geography: United States, Europe, Iran, Washington, Middle East, Tehran, Germany, Vienna
  • Author: Edward Blum, Roger Clegg, Abigail Thernstrom
  • Publication Date: 01-2006
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: Government memos leaked to the press are nothing new in Washington, yet they can still command a front-page, above-the-fold headline. The latest came on December 2, 2005, when the Washington Post trumpeted, “Justice Staff Saw Texas Districting as Illegal; Voting Rights Finding on Map Pushed by DeLay Was Overruled.” (Part of this story was recycled by the Post on Monday, January 23, in another front-page, above-the-fold story.) The story that followed loosely described the contents of a 2003 internal Department of Justice memo written by career staffers in the voting section of the civil-rights division. Those staffers—five lawyers and two analysts—had concluded that the Congressional redistricting plan Texas had recently submitted to them for approval was in violation of the 1965 Voting Rights Act because it “retrogressed”—or, more simply, “diminished”—the electoral position of blacks and Hispanics. Then attorney general John Ashcroft and the political appointees in the civil-rights division—as well as, incidentally, a career lawyer higher in the chain of command (a fact that the Post failed to note)—rejected the memo's findings and allowed Texas to implement the new plan.
  • Topic: Civil Society, Government, Politics
  • Political Geography: United States, Washington
  • Author: John E. Calfee
  • Publication Date: 02-2006
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: With the fourth Vioxx lawsuit currently under way, a fourth jury is in the thick of trying to determine whether Merck is indeed liable for any injuries that may or may not have arisen from the use of its blockbuster arthritis drug. The trials have highlighted bad tort bar science in all its dubious glory—from questionable pathology reports to seriously exaggerated claims about the dangers of Vioxx—but they also raise a deeper issue. Every drug presents patients and doctors with a trade-off between benefits and risks. But how can physicians and drug companies strike a balance in the age of a hyperactive litigation? Last week, the Food and Drug Administration (FDA) weighed in on that question when it published a long-awaited rule to simplify drug labels. Up to now, extensive, cringe-inducing lists of every imaginable side effect of a medicine were a drug company's best hope of immunizing itself from lawsuits down the road. The FDA wants to simplify those impenetrable reams of fine print by preempting state-court lawsuits claiming that an FDA-approved label failed to warn patients of a potential danger.
  • Topic: Economics, Government, Health, Human Welfare
  • Author: Charles Murray
  • Publication Date: 04-2006
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: This much is certain: the welfare state as we know it cannot survive. No serious student of entitlements thinks that we can let federal spending on Social Security, Medicare, and Medicaid rise from its current 9 percent of GDP to the 28 percent of GDP that it will consume in 2050 if past growth rates continue. The problems facing transfer programs for the poor are less dramatic but, in the long term, no less daunting; the falling value of a strong back and the rising value of brains will eventually create a class society making a mockery of America's ideals unless we come up with some- thing more creative than anything that the cur- rent welfare system has to offer. So major change is inevitable—and Congress seems utterly unwilling to face up to it. Witness the Social Security debate of last year, a case study in political timidity. Like it or not, we have several years to think before Congress can no longer postpone action. Let's use this time to start thinking outside the narrow proposals for benefit cuts and tax increases that will be Congress's path of least resistance.
  • Topic: Civil Society, Economics, Health, Human Welfare
  • Political Geography: America
  • Author: Steven F. Hayward
  • Publication Date: 10-2006
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: A close reading of Al Gore's views on the linkages between environmental issues and broader social and philosophical currents reveals their problematic political and policy implications. Gore derives our environmental problems from deeper metaphysical and psychosocial currents, a path that will foreclose a number of productive policy approaches to the problem of climate change.
  • Topic: Civil Society, Development, Environment, Politics
  • Author: Frederick W. Kagan
  • Publication Date: 03-2006
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: The debate about American policy and strategy in Iraq has veered off course. A number of myths have crept into the discussion over the past two years that distort understanding and confuse discussion. It is possible and appropriate to question the wisdom of any particular strategy proposed for Iraq, including the Bush administration's strategy, and there is reason to be both concerned and encouraged by recent events there. But constructive dialogue about how to choose the best way forward is hampered by the distortions caused by certain myths. Until these myths recede from discussions about Iraq strategy, progress in those discussions is extremely unlikely.
  • Topic: Security, War
  • Political Geography: United States, Iraq, America, Middle East
  • Author: Thomas Donnelly
  • Publication Date: 01-2006
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: For the world's unreconstructed monarchies, autocracies, and tyrannies—the demographic of aggressive states— and for those like Osama bin Laden, Ayman al-Zawahiri, and Abu Musab al-Zarqawi who aspire to create such states, there is not much to like about American geopolitical preeminence. Indeed, it sometimes appears as though it is the United States that is the aggressive, rising power. President George W. Bush's desire to maintain a “balance of power that favors freedom,” coupled with hyper-powerful means, prevents the United States from acting like a traditional, status-quo power. Viewed from the outside, the Pax Americana can appear less than peaceful.
  • Topic: International Relations, Security, Foreign Policy, Sovereignty
  • Political Geography: United States
  • Author: John H. Makin
  • Publication Date: 12-2005
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: On December 13 the Federal Reserve's Open Market Committee (FOMC) raised the federal funds rate, the principal tool for setting monetary policy, by 25 basis points to 4.25 percent. At the same time, the Federal Reserve Board of Governors greatly simplified what had been a tortured statement explaining the basis for their actions and the factors that will govern future actions. The statement was remarkably brief: Despite elevated energy prices and hurricanerelated disruptions, the expansion in economic activity appears solid. Core inflation has stayed relatively low in recent months and longer-term inflation expectations remain contained. Nevertheless, possible increases in resource utilization as well as elevated energy prices have the potential to add to inflation pressures. The Committee judges that some further measured policy firming is likely to be needed to keep the risks to the attainment of both sustainable economic growth and price stability roughly in balance. In any event, the Committee will respond to changes in economic prospects as needed to foster these objectives. (emphasis added).
  • Topic: Economics, Emerging Markets, Government, International Trade and Finance
  • Author: John H. Makin
  • Publication Date: 11-2005
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: Let's begin with a riddle: Why is the dollar like a Republican president? Answer: Because the dollar faces incessant predictions of imminent collapse, but in the end it wins out over weaker alternatives.
  • Topic: Development, Economics, Government, International Trade and Finance
  • Author: John H. Makin
  • Publication Date: 10-2005
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: Japan's stock market, one of the world's strongest this year, is up about 20 percent since spring. It is doing remarkably well for a country whose nominal GDP is still below its 1997 level. By contrast, the U.S. stock market has been drifting lower all year. The S 500 Index is down about 4 percent in the last five months, even more when the highflying energy sector is excluded. This is the case despite U.S. nominal GDP having grown by a cumulative 46 percent since 1997. Clearly, stock markets are looking ahead and seeing a brighter future for Japan than for the United States.
  • Topic: International Relations, Development, Economics
  • Political Geography: United States, Japan, Israel, East Asia
  • Author: John H. Makin
  • Publication Date: 10-2005
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: The U.S. economy was in recession when the 9/11 terrorist attacks struck New York and Washington, D.C. Yet within a few months, despite fears of a collapse in confidence, consumption growth surged to a fourth-quarter annualized rate of nearly 5 percent, up sharply from a 1 percent rate during the third quarter. That consumption surge was enough to drag the economy out of what turned out to be a mild recession. By the first quarter of 2002, overall growth reached a booming 5 percent rate.
  • Topic: Development, Economics, Environment, Terrorism
  • Political Geography: United States, New York, Washington
  • Author: John H. Makin
  • Publication Date: 08-2005
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: Among the more remarkable features of the U.S. economy over the past five years—through a tech-stock collapse (from which we have still not recovered), the 9/11 disaster, and numerous chastening corporate scandals —has been the extraordinary resilience of American consumers. To paraphrase H. L. Mencken, no one has ever gone broke (at least not recently) by overestimating the willingness of Americans to spend money.
  • Topic: Development, Economics, Government
  • Political Geography: United States, America
  • Author: John H. Makin
  • Publication Date: 08-2005
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: The persistence of annualized economic growth of about 3.5 percent—despite crude oil prices between $50 and $60 per barrel—has led many analysts to claim that the U.S. economy has already "absorbed" the shock of $2.35-plus-pergallon prices for self-serve regular gasoline along with a rise in heating oil costs of more than 30 percent over the last year. As if to underscore their insouciance over energy costs, American consumers accelerated the volume of vehicle purchases in June, especially those of light trucks that get only twelve or thirteen miles per gallon.
  • Topic: Development, Economics, Government
  • Political Geography: United States, America
  • Author: John H. Makin
  • Publication Date: 07-2005
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: Clear signs of political and economic stress have emerged from Europe in recent weeks. Rumors have circulated about discussions of a possible breakup of Europe's currency union, and one renegade Italian official, Welfare Minister Roberto Maroni, expressed a wish that Italy could return to the lira in order to get some help from a weaker currency to relieve Italy's current recession. Perhaps more telling, 54 percent of Germans polled would like to abandon the euro and return to the deutschemark. Similarly, the inflationary impact of the move from the gilder to the euro was cited by many of the Dutch citizens who voted decisively against ratifying the European Constitution.
  • Topic: Economics, Government
  • Political Geography: Europe, Germany, Italy
  • Author: John H. Makin
  • Publication Date: 06-2005
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: Paul Samuelson once quipped elegantly that (falling) stock prices had predicted seven out of the last three recessions. There is indeed wisdom in the suggestion to ignore wiggles in the financial markets as indicators of the behavior of the real economy that produces goods and services.
  • Topic: Development, Economics, Government
  • Political Geography: United States
  • Author: John H. Makin
  • Publication Date: 05-2005
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: The Federal Reserve's measured move toward a "neutral" federal funds rate, the short-term rate that keeps the economy growing at about 3.5 percent, is a tricky process. No one knows with certainty what the neutral fed funds rate is, and it changes over time. As long as the Fed keeps raising rates and the economy keeps growing at or above trend, it is reasonable to infer that the neutral fed funds rate is higher than the current rate. The corollary to that proposition is that rates have to be boosted above the neutral rate, inducing an asset market collapse, a real economy slowdown, or both to infer that the neutral rate has been exceeded. It is beginning to appear as though the current rate of 2.75 percent is at or above neutral. If so, that would be about a full percentage point below what many were guessing.
  • Topic: Development, Economics, Government
  • Political Geography: United States
  • Author: John H. Makin
  • Publication Date: 04-2005
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: I knew Alan Greenspan had his first bubble in late 1999 when cab drivers were too busy talking to their brokers on cell phones to talk with customers. The "cab driver test" flashed its second bubble warning light to me just recently when I arrived in Key West for the annual winter vacation with my family. Without any prompting, our cab driver told us of a Key West real estate market on fire. Condos that were selling a year ago for $600,000 could not be touched for $1 million today, while the units under construction were sold four times over before anyone even thought of occupying them. The old hotels were being torn down to be replaced by condos that were selling like hotcakes before construction had begun. Meanwhile, room rates and rental rates in Key West have hardly budged. The implied return on investment in real estate is tied to an expectation of ever-rising prices, not to income from property.
  • Topic: Economics, International Trade and Finance, Political Economy
  • Author: John H. Makin
  • Publication Date: 03-2005
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: Alarmists who call for American households to save more point to a steady drop in the conventionally measured U.S. saving rate to about 1 percent at the end of last year and to a rise in household debt to a level well over 100 percent of personal disposable income. The current account deficit, our external deficit, measures national dis-saving at close to 6 percent of GDP. The federal government's budget deficit contributes about 4 percentage points to national dis-saving and it, too, is the subject of considerable hand-wringing by those who point to a need for higher U.S. saving at both the household and national levels.
  • Topic: Economics, International Trade and Finance, Political Economy
  • Political Geography: America
  • Author: John H. Makin
  • Publication Date: 02-2005
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: The average forecast for 2005 U.S. growth is 3.5 percent, with some prognosticators hoping for 4 percent. This forecast is predicated upon the assumption that the economy is on a sustainable expansion path, where consumption will be supported by steady growth of employment and household incomes. The 3.5 percent growth forecast for 2005 is identical to the mean growth rate of the U.S. economy since 1947. However, there is good reason to believe that the consensus forecast is too high. This possibility has important consequences because U.S. growth must be sustained at least at average levels to avoid a sharp drop in global growth. There are no signs of higher growth in Europe and Asia. Growth in Japan is looking weaker, while Chinese growth is moderating.
  • Topic: Economics, International Trade and Finance, Political Economy
  • Political Geography: United States, Japan, China, Europe, Asia
  • Author: John H. Makin
  • Publication Date: 01-2005
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: The pundits who have been predicting higher interest rates based on large U.S. budget and current account deficits have some explaining to do. Beyond the fact that very little systematic empirical evidence exists of a close link between deficits of any kind and interest rates, many high-profile commentators such as Robert Rubin and Pete Peterson, not to mention Pimco's Bill Gross, have consistently warned that long-term interest rates would rise as America's budget and current account deficits rose. Actually, U.S. longterm interest rates have been falling-from 4.8 percent in early June to 4.1 percent at year-end. Despite this stellar performance, Gross has even gone so far as to suggest that U.S. government liabilities should be downgraded from their top rating of AAA to AA.
  • Topic: Economics, International Trade and Finance, Political Economy
  • Political Geography: United States
  • Author: Douglas Besharov
  • Publication Date: 10-2005
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: For forty years, Head Start has sought to improve the life prospects of low-income children. Since 1965, about 20 million children have gone through the program at a total cost of more than $100 billion. Head Start was supposed to be reauthorized in 2003, but for two years Congress was immobilized as the Bush administration and its Republican allies pushed for what they saw as needed improvements in the program—while Democrats and the Head Start establishment argued that the proposals would hurt poor children. The impasse was broken earlier this year when key Republicans gave up their efforts to change the program. Committees in both Houses have now voted unanimously to expand eligibility for Head Start. The Senate bill would raise the income-eligibility cap from the poverty line to 130 percent of poverty (a roughly 35 percent increase in the number of children eligible for the program), and the House bill would allow programs to enroll more one-and two-year-olds, rather than their traditional target group of three- and four-year-olds (ultimately doubling the number of eligible children).
  • Topic: Development, Economics, Education, Government
  • Author: Robert W. Hahn
  • Publication Date: 10-2005
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: With oil and gas prices at record levels, Persian Gulf producers threatened by terrorists, and exploding demand from China likely to strain supplies for years to come, surely it is time for Washington to get serious about energy conservation. Well, yes . . . and no. While most economists (including me) are deeply skeptical about the value of government mandates for energy efficiency, in principle there is a case to be made for using taxes to “internalize” the costs of consumption that are not otherwise reflected in prices. But those costs are lower than you might expect—lower, perhaps, than the taxes currently charged at the pump. Moreover, while oil-security worries are now driving the calls for conservation, a careful look suggests that the neglected costs are actually related to traffic congestion and the threat of global warming. Taxing oil consumption (as opposed to taxing road use or carbon emissions) would hardly get to the roots of these problems.
  • Topic: International Relations, Economics, Energy Policy, Terrorism
  • Political Geography: China, Washington
  • Author: Roger F. Noriega
  • Publication Date: 10-2005
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: The fourth regional Summit of the Americas in Mar del Plata, Argentina, on November 4–5, will be a test of courage for the region's leaders. Pressured by genuine popular dissatisfaction, they will either commit unequivocally to finish the hard work of creating economic opportunity for the region's 128 million poor, or they will let warmed-over populism undermine the consensus behind free-market reforms and democracy itself. The stakes are high, and the leaders must use the summit process to advance the reform agenda for their peoples' sake. At the summit, President George W. Bush will, no doubt, press his colleagues to reemphasize their commitments to defend democracy and the rule of law, deepen economic reforms, and expand trade as a recipe for sustained, equitable growth. But there is a significant number of Latin leaders who may try to scuttle this work plan and serve up sympathetic rhetoric to cynically court the poor.
  • Topic: International Relations, Democratization, Treaties and Agreements
  • Political Geography: America, Argentina, South America
  • Author: Adam Lerrick
  • Publication Date: 11-2005
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: World Bank money is building schools in China's impoverished western provinces, but the bill for interest charges is being mailed to the United Kingdom, attention Chancellor of Exchequer Gordon Brown. Mexico, Chile, and Brazil will soon be lining up for the same deal. This is but the latest scheme designed to preserve the World Bank's lending role at a time when the need and demand for its services are falling. Major middle-income countries, the cream of the bank's lending portfolio and where more than 80 percent of Latin Americans live, are curbing their borrowing and paying down their balances, setting off alarms at the bank. Net loan flows have shifted from a positive $10 billion in 1999–2001, to a negative $15 billion in 2002–2004.
  • Topic: Debt, Development, Economics, Third World
  • Political Geography: China, United Kingdom, Brazil, Latin America, Mexico, Chile
  • Author: James Q. Wilson
  • Publication Date: 12-2005
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: My fellow Americans, we are winning, and winning decisively, in Iraq and the Middle East. We defeated Saddam Hussein's army in just a few weeks. None of the disasters that many feared would follow our invasion occurred. Our troops did not have to fight door to door to take Baghdad. The Iraqi oil fields were not set on fire. There was no civil war between the Sunnis and the Shiites. There was no grave humanitarian crisis. Saddam Hussein was captured and is awaiting trial. His two murderous sons are dead. Most of the leading members of Saddam's regime have been captured or killed. After our easy military victory, we found ourselves inadequately prepared to defeat the terrorist insurgents, but now we are prevailing.
  • Topic: Civil Society, Government
  • Political Geography: United States, Middle East, Baghdad
  • Author: James Q. Wilson
  • Publication Date: 12-2005
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: National Review, at its founding in 1955, had as its mission stating and defending a conservative view in a nation that many believed had known only a liberal tradition. It was a difficult task, not only because of liberalism's apparent supremacy, but because it was not easy to define a conservative alternative. Conservatism could mean free-market economics, the reassertion of a traditional morality, or the endorsement of a religious or classical basis for moral thought. In the spirited discussions that took place in this magazine and elsewhere, each of these views had its proponents, and—as they made quite clear—their views were often in conflict. Individualism and free-market economics could leave morality to personal and even aberrant judgments, but a revival of moral thought and a reassertion of its religious basis could easily suppress individual choice and impose regulatory restraints on the market.
  • Topic: Civil Society, Ethnic Conflict, Human Rights
  • Political Geography: United States, America
  • Author: Lawrence B. Lindsey
  • Publication Date: 12-2005
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: In the company of history's great revolutionaries, Rose and Milton Friedman stand out as clear anomalies. Diminutive in stature and modest in speech and manner, they cannot easily be imagined manning the barricades or hectoring the crowds from a soapbox. Most important, unlike other visionaries who sought to change the world, the Friedmans did not say, “Put us in charge of the government, and we will make your life better.” Rather, they argued that governments then in charge should get out of the way so that individuals could get on with the job of making their own lives better. Their 1980 book Free to Choose successfully instigated a revolution in public policy because it offered conservatives both a rhetorical weapon and a legislative program. Until then, the Left had a clear advantage on both scores. Rhetorically, the Left promised compassion and equality and packaged them with programmatic action in the form of ever-increasing government power. Those opposed to an ever larger and more intrusive state were thus forced to defend hardheartedness and inequality, and to oppose legislative change.
  • Topic: Civil Society, Economics, Government, Politics
  • Author: Frederick W. Kagan
  • Publication Date: 12-2005
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: Is retreat from, withdrawal from, or defeat in Iraq inevitable? Almost all opponents of the Bush administration say it is. As Representative John Murtha (D-Pa.) put it in mid-November, when demanding the “immediate redeployment of U.S. troops” consistent with their safety, “The United States cannot accomplish anything further in Iraq militarily. It is time to bring the troops home.” This was echoed more recently by Democratic National Committee chairman Howard Dean: “The idea that we're going to win this war is an idea that, unfortunately, is just plain wrong.” Advocates of withdrawal point to continuing attacks on coalition and Iraqi targets and to the steady, somber flow of U.S. casualties, as well as the increasing fear that our army will break under the strain of prolonged occupation. Administration supporters of course share these concerns, and some seem (privately) to share the view that the war may be unwinnable. Even a few inside the administration may have their doubts. In any case, the administration clearly believes that it has to promise a significant reduction of U.S. forces in Iraq—“conditions permitting”—in 2006. Reports are circulating that preparations for troop reductions have already begun.
  • Topic: International Relations, War
  • Political Geography: United States, Iraq, Middle East
  • Author: Michael S. Greve
  • Publication Date: 10-2005
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: Berlin is far from Baghdad, and the Germans at least want to keep it that way. But for all the obvious differences, Germany's inconclusive election results and the impending constitutional referendum in Iraq point to some identical obstacles to effective and constitutional government. These obstacles are proportional representation and “cooperative federalism.” As it happens, well-meaning UN officials, NGOs, and U.S. advisers have been urging these constitutional arrangements upon numerous fledgling democracies, including Iraq. That may not be good advice.
  • Topic: Government, United Nations
  • Political Geography: United States, Iraq, Europe, Middle East, Baghdad, Germany, Berlin
  • Author: Charles Murray
  • Publication Date: 10-2005
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: Watching the courage of ordinary low-income people as they deal with the aftermath of Katrina and Rita, it is hard to decide which politicians are more contemptible—Democrats who are rediscovering poverty and blaming it on George W. Bush, or Republicans who are rediscovering poverty and claiming that the government can fix it. Both sides are unwilling to face reality: We have not rediscovered poverty, we have rediscovered the underclass. The underclass has been growing during all the years that people were ignoring it, including the Clinton years; and the pro- grams politicians tout as solutions are a mismatch for the people who constitute the problem. We have rediscovered the underclass. Newspapers and television understandably prefer to feature low-income people who are trying hard—the middle-aged man working two jobs, the mother worrying about how to get her children into school in a strange city. These people are rightly the objects of an outpouring of help from around the country, but their troubles are relatively easy to resolve. Tell the man where a job is, and he will take it. Tell the mother where a school is, and she will get her children into it. Other images show us the face of the hard problem: those of the looters and thugs, and those of inert women doing nothing to help themselves or their children. They are the underclass.
  • Topic: Civil Society, Economics, Government, Human Welfare
  • Author: Nicholas Eberstadt
  • Publication Date: 10-2005
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: Contrary to conventional wisdom, which holds the North Korean state to be an unremittingly hostile “negotiating partner,” history actually demonstrates that Pyongyang can be a highly obliging interlocutor under certain very specific conditions. All that is necessary to “get to yes” with the Democratic People's Republic of Korea (DPRK) is to concede every important point demanded by the North Korean side while sacrificing vital interests of one's own. The mid-September “breakthrough” at the six-party talks in Beijing would appear to conform precisely to this long-established pattern. The vaunted outcome—a long-desired “consensus statement” inked by North Korea and the other five governments engaged in protracted discussions over North Korean denuclearization—is being celebrated by diplomatic sophisticates in Seoul, Beijing, Moscow, Tokyo, and Washington.
  • Topic: International Relations, Diplomacy, Nuclear Weapons
  • Political Geography: Washington, Beijing, Asia, North Korea, Tokyo, Korea, Seoul
  • Author: Michael Rubin
  • Publication Date: 09-2005
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: Iraqis gathered around television sets as midnight approached on August 22. They watched as constitutional-drafting committee members and political elites whispered among themselves. When the speaker of the national assembly, Hachim al-Hasani, declared, “We have received a draft of the constitution,” the assembly erupted in applause. “But,” he added, “there are some points that are still outstanding and need to be addressed in the next three days.” Late into the night, politicians and activists continued to meet in the Baghdad homes of the major powerbrokers, grappling with the roles of federalism and Islam in the new Iraq. While U.S. diplomats and Washington advisers continue to facilitate compromise among Iraq's disparate sectarian, ethnic, and political groups, the reality emerging outside Baghdad is directly challenging Iraq's aspirations to constitutionalism. The U.S. government has spent hundreds of thousands of dollars to bring outside experts to Baghdad for a period of a few days or a few weeks, but Iraqi powerbrokers dismiss their advice as naive or irrelevant. Massoud Barzani in the Kurdish north and Abdul Aziz al-Hakim and Muqtada al-Sadr in the Shiite south have rejected the experts' academic proposals, and have chosen instead a model perfected by Yasser Arafat, the late chairman of the Palestine Liberation Organization.
  • Topic: International Relations, Politics
  • Political Geography: United States, Iraq, Washington, Middle East, Baghdad
  • Author: John E. Calfee
  • Publication Date: 09-2005
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: If we know anything about the American tort liability system, we know that it works badly when it gets infected by junk science. The recent Vioxx verdict in Angleton, Texas, is a case in point. The jury awarded $253 million to the widow of a man who died after taking the now-infamous pain reliever. The award will almost certainly be reduced to something like $5 million or $10 million because it ignored statutory limits on punitive damages, and it may eventually get thrown out because of mistakes by the judge. But even at “only” $10 million a case, a string of adverse Vioxx decisions would prove an expensive example of the triumph of the junk lawsuit over science. Most press accounts portray the jury's decision as simply a reflection of medical science, which supposedly has indicted and convicted Vioxx of causing excess heart attacks. This view prevailed in the four months after September 30, 2004, when Merck voluntarily pulled Vioxx from the market. Those months saw vituperous debate and criticism of both Merck and the Food and Drug Administration in leading medical journals. A renegade FDA staffer testified at congressional hearings along with other critics.
  • Topic: Development, Government, Human Welfare, Science and Technology
  • Political Geography: America
  • Author: Richard Vedder
  • Publication Date: 09-2005
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: As college students begin a new academic year, many parents are reeling from tuition charges. This fall's estimated 8 percent average increase at public universities, added onto double-digit hikes in the two previous years, means tuition at a typical state university is up 36 percent over 2002—at a time when consumer prices in general have risen less than 9 percent. In inflation-adjusted terms, tuition today is roughly triple what it was when parents of today's college students attended school in the 1970s. Tuition charges are rising faster than family incomes, an unsustainable trend in the long run. This holds true even when scholarships and financial aid are considered. One consequence of rising costs is that college enrollments are no longer increasing as much as before. Price-sensitive groups such as low-income students and minorities are missing out. A smaller proportion of Hispanics between eighteen and twenty-four attends college today than in 1976. The United States is beginning to fall below some other industrial nations in population-adjusted college attendance.
  • Topic: Development, Economics, Education, Government
  • Political Geography: United States
  • Author: R. Glenn Hubbard
  • Publication Date: 09-2005
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: Ceremonial gift-giving is an integral part of doing business in China. The value lies not so much in the gift (whose packaging is often more elaborate), but in the possibility of cementing a mutually beneficial relationship. And so it was a few weeks ago with the headline-grabbing announcement that China would revalue the yuan against the U.S. dollar. The modest gesture may make more possible a comprehensive economic dialogue between China and the United States in the interest of both nations. The announcement on July 21 by the People's Bank of China that it would revalue the yuan, abandoning the eleven-year-old peg of 8.28 yuan per U.S. dollar, caught financial markets by surprise. The jolt led market participants to gauge effects of current (and perhaps future) revaluations on currency values and interest rates. And, some U.S. political leaders claimed a victory in the campaign to blame Chinese “market manipulation” for external imbalances facing the United States.
  • Topic: Economics, Emerging Markets, International Trade and Finance
  • Political Geography: United States, China, Asia
  • Author: Nicholas Eberstadt
  • Publication Date: 08-2005
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: In the nearly six decades since the United Nations approved the Universal Declaration of Human Rights, more than one constitutional democracy presiding over an ethnically homogeneous populace—governing a nationality, if you will—has been faced with the prospect of a humanitarian crisis afflicting compatriots living beyond its borders. And on more than one occasion, such states have been moved by those same crises to affect the rescue of their countrymen—by welcoming them into the homeland, embracing them as fellow citizens, and permitting them to enjoy the opportunities and benefits of life under secure, constitutional, and democratic rule. The Federal Republic of Germany faced one such crisis in the very earliest days of its existence. That particular humanitarian emergency entailed the plight of the unlucky people who came to be called Vertriebene: ethnic Germans—most of them women and children—who, by no fault of their own, had to flee before the harsh and vindictive specter of Soviet expansion.
  • Topic: International Relations, United Nations, War
  • Political Geography: Asia, Soviet Union, Germany
  • Author: Scott Gottlieb
  • Publication Date: 07-2005
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: There are seldom eureka moments in health care. Few new drugs or medical devices save scores of lives or cure diseases when they first hit the market. New technologies rarely translate into immediate life expectancy gains, and it is uncommon that results of a single study will transform how medicine is practiced. Medical progress is not magic, and sudden discoveries do not lead to dramatic cures, although a new book by Marcia Angell, a former editor of The New England Journal of Medicine, would lead you to think all of our gains in health have been achieved from just a handful of the most potent new medicines. Instead, medical breakthroughs unfold over time, and gains in life expectancy and health are realized only after a series of small technological advances are collected into new ways of practicing medicine or attacking a disease. The practice of medicine unfolds not in a series of certainties, but in a series of doubts.
  • Topic: Civil Society, Development, Human Welfare, Science and Technology
  • Political Geography: England
  • Author: Scott Gottlieb
  • Publication Date: 06-2005
  • Content Type: Policy Brief
  • Institution: American Enterprise Institute for Public Policy Research
  • Abstract: When drug maker GlaxoSmithKline held a showcase day for investors late last year, the company bragged about its burgeoning pipeline of new medicines, but also a fruitful restructuring it undertook a few years ago. Glaxo broke its sprawling research shop into smaller units focused on a dozen or so disease areas. In was an emphasis on major health problems, such as cancer, heart disease, and brain disorders like Alzheimer's dis- ease. Gone were the same concerted efforts to focus the majority of its research on more routine medical problems such as sniffles, sore muscles, and nicotine addiction. Like a lot of other drug makers, Glaxo is moving its research upstream into weighty maladies that have remained unsolved by modern medicine and away from primary-care problems.
  • Topic: Civil Society, Economics, Emerging Markets, Human Welfare