Sanction Your Friends, Not Your Enemies

 Posted by  Foreign Policy, Foreign Trade  Comments Off on Sanction Your Friends, Not Your Enemies
Nov 202013
 

There’s  a very interesting “Room for Debate” section on NYTimes.com on the efficacy of economic sanctions.  I encourage you all to read it, but let me add my own take.

There are three pieces of “common knowledge” in the wider debate about sanctions:

  1. Economic Sanctions are a valuable and useful tool for encouraging good behavior or penalizing bad behavior.
  2. Economic Sanctions work better when they are multilateral; that is, the more countries that agree to the sanctions, the more powerful they will be.
  3. Economic Sanctions, if not implemented properly, harm the wrong people.

It turns out that none of these assertions are nearly as simple as they first appear. Continue reading »

 

The United States of America is the most powerful nation in the world.  We have one of the largest militaries (by total manpower) and we spend almost 10 times as much on that military as any other nation–making the United States military the best armed and trained group in the world.  We have the best guns, the best armor, the best vehicles, the best global communications infrastructure… it all adds up to an impressively powerful fighting force.  Additionally, the United States has the largest and richest economy in the world by almost every measure.  We have an incredible treasure-trove of human capital–many of the best educated people in the world are Americans, and many who were born elsewhere end up moving and working here as adults.  We have the biggest consumer goods market in the world, a massive network of industries and factories (even still), vast quantities of national resources.  You name it, the United States has it.

And yet, despite all that power, the United States is unable to convince poppy farmers in Afghanistan to grow different crops (poppy is the primary ingredient in many illegal drugs, and the poppy trade in Afghanistan finances terrorism).  We are unable to convince parents in Pakistan to stop sending their children to Islamist schools.  We are unable to convince North Korea or Iran to give up their nuclear ambitions.  We can’t stop Syria or Sudan from massacring their own people, and we can’t force radical Palestinians to give up their hope of reclaiming Israel.

Why is that?

If you were to ask that question of a politician, they will likely give you an answer based on the usage of that power.  Politicians, especially politicians who are not currently in power, like to believe that the only thing stopping us from doing any or all of those things is bad tactics.  If we just “sent more consistent messages” or “stood up for our allies” or “engaged the world community” or whatever, we could unleash that power in the right way at the right time to accomplish any and everything that the United States wanted to accomplish.  It’s a theme in this, and every, presidential election.

And it is false. Continue reading »

 

I remember watching the news, it must have been around the year 2000, and seeing several economist-pundits discussing the “new economy”. The general agreement on the round-table that day, with only one dissenter, was that the United States had entered into a post-cycle economy due to the technological boom of the 1990s and that the normal rules regarding the cyclical nature of inflation, unemployment, and interest rates no longer applied. The high-tech bubble burst less than a year later. Ten years earlier, conventional wisdom among many pundits was that due to Japan’s trade practices and business culture, the United States would not be able to compete with the Japanese for global economic dominance. That was right before the Japanese economy collapsed. In the summer of 2007, as more and more economists and news organizations were expressing concern over the housing bubble and what looked like an impending credit crisis, I remember Neil Cavuto on his “business” show on Fox chastising the media for their nay-saying and pointing to the steady growth of the stock market as indication of the fundamental soundness of the American economy. Within six months the economy had lost 40% of it’s value.

Economic predictions are notoriously bad. The truth is that economies swing back and forth due to an intricate combination of factors which we are only beginning to understand–and one of those factors is public perception and confidence which we may never fully be able to understand. That being said, it is possible to identify the really bad predictions.
Continue reading »

 

I’m out of town at a conference, so I have to keep this short.
Recently, a large number of toys were recalled from the market because they contained a higher than safe amount of lead in their paint. The toys were produced in China, where there isn’t very stringent oversight to ensure safety or quality control. Several congressman have decried the safety risk to children, and called on the U.S. government for more oversight.
The next day, congress passed legislation allowing the importing of pharmaceuticals from other countries so as to lower the expense of prescription drugs. Why are the drugs cheaper in other countries? Because there’s not as much oversight to ensure safety and quality control.

In order to be harmed by the toys, children would have to eat the paint in sufficient quantities to cause brain damage, and even then its not clear how bad the damage would be. In order to be harmed by prescription drugs which are taken orally and often contain toxic chemicals that are safe in small quantities with the proper treatment…. well… lets just say a safety oversight would be much, much worse.

This is myopic hypocrisy at its most basic. Either we need to protect consumers from imports, or we don’t. But if we do, then we should focus our attention on the products that can do the most harm, not cut corners when its cheap and politically expedient. I wonder who will take the blame when that first batch of contaminated arthritis medication sends thousands of seniors to the hospital… will it be the congress that passed the dumb laws, or will anger fall on the drug companies… I wonder…

 

The current incarnation of the post-hippie counter-culture is absurd. There are more than six billion people on the planet, and almost half of them have to struggle to even feed themselves on a daily basis. Of course, there is plenty of food out there. It’s just a matter of distribution. The United States and Europe have the technology and the capital to make food production insanely efficient. But for a wide variety of reasons that capital, the technology, and even the surplus food that we produce, often doesn’t get to the places where it is needed most. And it’s not just a matter of rich vs. poor. Deciding to feed the third world might mean sacrificing family farmers or low income laborers in our own countries, and even then we have to balance grants of food and money to keep people alive today, with the incentives and training necessary to produce viable local industries. Yeah, the current system is broken, but real reform is hard, it’s going to require a lot of sacrifice, and it’s going to require that we convince our politicians that we actually want to make those sacrifices. But all too often I’ve been told by my more liberal friends, or by liberal media outlets, to make meaningless symbolic gestures that don’t even begin to address the real issues. Let me give you a few examples.

Continue reading »

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