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How much economic growth can tax reform deliver? Part II - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Tue, 11/21/2017 - 20:15

This blog is Part II in a three-part blog series discussing how much of an impact tax reform can have on economic growth. Find Part I, authored by Alan Viard, here.

There are obvious limitations to our understanding of society and our ability to predict various counterfactual futures, and those limitations extend to the tax policy realm. But there are at least three ideas here that I think most economists would agree on.

Chairman of the House Ways and Means Committee Kevin Brady (R-TX) and Speaker of the House Paul Ryan (R-WI) and unveil legislation to overhaul the tax code on Capitol Hill in Washington, US, November 2, 2017. REUTERS/Joshua Roberts

First, I think that we have a reasonably good sense of the direction in which and the order of magnitude of the amounts by which major changes to the tax code will move GDP levels in the short run to medium run. Reduced taxation of capital (and labor), for example, will most likely lead to a higher level of output on that time horizon. I have little to add to Alan’s summary of the impact of the Republican tax plan in that respect.

Second, and somewhat conditional on accepting the tenets of rational-choice theory, we have a detailed understanding of how various distortions in the tax code make people worse off. A good example is the treatment of employer-provided health insurance. Because this type of compensation is not taxed, employers and workers will use more of it than they would in a world in which it is taxed; that, everything else equal, makes society as a whole worse off. Note that there is no GDP numbers claim here: The distortion may lower or raise output or consumption at any given point in time, but what the distortion does is to make us choose the wrong type of consumption.

Third, our understanding of whether and how various tax initiatives will affect productivity growth in the long run is more limited. Some of what under the logic of point one and two may look detrimental because it raises marginal tax rates and introduces distortions — say, special treatment for activities related to research and development, or measures to incentivize people to move to more productive areas — may well add to growth in the long run.

Also by Stan Veuger:

America’s food assistance programs and hunger - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Tue, 11/21/2017 - 19:23

As preparation for another Thanksgiving begins, it is difficult to think about the families who struggle to afford food. According to the 2016 Food Security Survey, 12.3% of households (or 15.6 million) were food insecure at some point in 2016 and 4.9% (6.1 million) had very low food security.

Via Twenty20

At the same time, the federal government spends billions of dollars providing food assistance to low-income families each year. The Supplemental Nutrition Assistance Program (SNAP) provided $66 billion in food benefits in 2016 to over 44 million people in the average month. Add to that another $13.6 billion for the National School Lunch program and $6 billion for the Women, Infant, and Children (WIC) program and the federal government spent nearly $85 billion on food assistance for low-income households last year.

See also:

Some might look at the persistence of food insecurity in American households and think the federal government’s response is inadequate. But a closer look suggests that these programs achieve a great deal. Just over half of poor households (under 130% of the federal poverty line) who received SNAP for the entire year reported being food secure, meaning that they had adequate food without worry of running out. Almost 80% of these households did not report “very low food security,” meaning they never had to cut or skip meals.

Also encouraging is how well households with children are served: 8.0% experienced food insecurity in 2016, but less than 1% experienced very low food security. This means that a combination of SNAP and the National School Lunch Program provide enough assistance to low-income households in America that very few children actually go hungry.

Nonetheless, the concern should remain for those households that remain food insecure either because they do not participate in food assistance programs, or because they remain unable to afford food even with the assistance they get. Reforms are needed, particularly to SNAP, in order to reduce food insecurity even further.

Congress is currently working on a new Farm Bill, which includes oversight of SNAP. Lawmakers will propose increasing SNAP benefit amounts by citing the share of households that are food insecure. But arguments over whether SNAP benefit amounts should be raised may miss some broader points. Half of SNAP participating households indicate that they are food secure, suggesting that benefit levels alone may not be the problem.

Congress is encouraged to consider three other aspects when it comes to reforming SNAP as a way to reduce food insecurity: (1) allowing benefit levels to vary based on cost of living in different geographic areas, (2) allowing restrictions that ensure that households can only purchase food with benefits (and not sugary beverages), and (3) strengthening work expectations and programs for SNAP participants.

See also:

The calculation of SNAP benefits is complicated, but for the most part, little consideration is given to cost of living differences across the country. Benefit levels are the same no matter where one lives. Fixing this could take many forms, such as allowing states to set benefit levels, changing deductions based on housing prices, or establishing benefit multipliers based on cost of living indices.

Restricting what can be purchased with SNAP benefits may seem unrelated to food insecurity, but almost 10% of food expenditures in SNAP households goes toward sugar-sweetened beverages. It is difficult to think about food security when such a large share of SNAP goes toward something that is not food. Ensuring that only food is allowed for purchase may increase levels of food security.

Finally, addressing food insecurity must consider the broader context of low income and limited employment for SNAP households. Although many SNAP households work, some do not and they could benefit from employment programs designed to help connect them to the labor market. Reasonable work requirements and employment and training programs should be part of any conversation about SNAP in the new Farm Bill.

Food security for all American households is an important goal. SNAP and other federal food assistance programs already help millions of families, but for those who still struggle to afford adequate food, reforming SNAP could provide the help they need.

Learn more:

Fighting the last financial battle - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Tue, 11/21/2017 - 16:42

It is said that generals fight the last war all too often. One has to wonder whether the same might be said of the Federal Reserve in its effort to avert a future economic and financial crisis.

U.S. President Donald Trump looks on as Jerome Powell, his nominee to become chairman of the U.S. Federal Reserve, speaks at the White House in Washington, U.S., November 2, 2017. REUTERS/Carlos Barria

Despite the many warning signs of dangerous financial market vulnerabilities, and the knowledge that the next economic crisis is all too likely to take a different form than the last crisis, the Fed is wrongly taking comfort in the notion that Congress has put in place a more robust system of bank regulation than it had in place on the eve of the 2008-2009 crisis.

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How much economic growth can tax reform deliver? - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Tue, 11/21/2017 - 16:41

The potential economic benefits of tax reform have been vigorously debated in recent months, with some supporters claiming that reform would raise the annual growth rate of the economy to 3%, 4%, or even higher. Although those claims are misplaced and exaggerated, a well-designed tax reform could deliver significant economic benefits.

(L-R) Senate Majority Leader Mitch McConnell, Sen. Orrin Hatch, Treasury Secretary Steve Mnuchin and Director of the National Economic Council Gary Cohn introduce the Republican tax reform plan at the U.S. Capitol in Washington, U.S., November 9, 2017. REUTERS/Aaron P. Bernstein

Predicting a specific growth rate is misdirected because it does not address the incremental effect of tax reform. GDP growth at a 3% annual rate after tax reform was adopted would mark an achievement if the growth rate would have been 2.5% without the reform, but not if the growth rate would otherwise have been 3.5%. With or without tax reform, economic growth will be affected by numerous unrelated factors that are hard to predict.

Also, there is little reason to expect that tax reform would permanently increase the growth rate of GDP. Instead, a well-designed tax reform would permanently raise the level of GDP by temporarily increasing its growth rate.

For example, the Tax Foundation recently estimated that the House tax bill would permanently raise the level of GDP by 3.5% — for the moment, let’s assume that estimate is right. That GDP increase could occur, for example, through GDP growing 0.35% per year faster for ten years, with no change in later growth rates. If baseline GDP growth was 1.8% per year, tax reform could boost the growth rate to 2.15% per year for a decade, with growth returning to its 1.8% pace thereafter.

These effects may seem small, relative to the claims made by some supporters. Also, the actual GDP increase is likely to be smaller than the Tax Foundation estimated because its analysis did not consider the likely effects of tax reform on interest rates. But the potential economic gains are still large enough to make a well-designed tax reform worth doing.

We should beware of exaggerated claims, but we should not give up on tax reform.

See also:

Uber tax in Chicago? | In 60 seconds - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Tue, 11/21/2017 - 15:25

Chicago’s mayor Rahm Emanuel proposed a tax hike on ride-sharing services, which would hurt companies like Uber and Lyft. Should the Windy City tax successful startups in order to help fund their public transportation system? AEI’s James Pethokoukis gives his take.

Giving thanks for kaleidoscopic market energy, the invisible hand of strangers (‘market benefactors’) and no turkey czars - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Tue, 11/21/2017 - 14:27

This Thanksgiving post has been an annual tradition at CD and I feature a slightly revised version again this year!

Like in previous years, most of you probably didn’t call your local supermarket ahead of time and order a Thanksgiving turkey this year. Why not? Because you automatically assumed that a turkey would be there when you showed up, and it probably was there when you appeared “unannounced” at your local grocery store and selected your Thanksgiving bird. Or it will be there today or tomorrow when you do your holiday grocery shopping, or when you “skip the trip” to the grocery store and get 2-hour delivery from Amazon Prime Now (fresh and frozen turkeys now available in some markets e.g., New York City, DC, Chicago, Seattle, and LA).

The reason your Thanksgiving turkey was waiting for you without an advance order? Because of the economic concepts of “spontaneous order,” “self-interest,” and the “invisible hand” of the free market. Turkeys appeared in your local grocery stores primarily because of the “self-interest” (maybe even greed in some cases) of thousands of turkey farmers, truck drivers, and supermarket owners and employees who are complete strangers to you and your family. But all of those strangers throughout the turkey supply chain co-operated on your behalf and were led by the “invisible hand” to make sure your family had a turkey on the table to celebrate Thanksgiving this year. The “invisible hand” that was responsible for your holiday turkey is just one of millions of everyday examples of the “miracle of the marketplace” where “individually selfish decisions must lead to a collectively efficient outcome,” as economist Steven E. Landsburg observed.

In a 2003 Boston Globe article titled “Giving Thanks for the Invisible Hand,” syndicated columnist Jeff Jacoby offered a wonderful tribute to the miracle of the invisible hand that makes affordable turkeys available so efficiently every year at Thanksgiving through the power of “spontaneous order” and without the need for any central planning or “turkey czars”:

Isn’t there something wondrous — something almost inexplicable — in the way your Thanksgiving weekend is made possible by the skill and labor of vast numbers of total strangers?

To bring that turkey to the dining room table required the efforts of thousands of people — the poultry farmers who raised the birds, of course, but also the feed distributors who supplied their nourishment and the truckers who brought it to the farm, not to mention the architect who designed the hatchery, the workmen who built it, and the technicians who keep it running. The bird had to be slaughtered and defeathered and inspected and transported and unloaded and wrapped and priced and displayed. The people who accomplished those tasks were supported in turn by armies of other people accomplishing other tasks — from refining the gasoline that fueled the trucks to manufacturing the plastic in which the meat was packaged.

The activities of countless far-flung men and women over the course of many months had to be intricately choreographed and precisely timed, so that when you showed up to buy a fresh Thanksgiving turkey, there would be one — or more likely, a few dozen — waiting. The level of coordination that was required to pull it off is mind-boggling. But what is even more mind-boggling is this: No one coordinated it.

No turkey czar sat in a command post somewhere, consulting a master plan and issuing orders. No one forced people to cooperate for your benefit. And yet they did cooperate. When you arrived at the supermarket, your turkey was there. You didn’t have to do anything but show up to buy it. If that isn’t a miracle, what should we call it?

Adam Smith called it “the invisible hand” — the mysterious power that leads innumerable people, each working for his own gain, to promote ends that benefit many. Out of the seeming chaos of millions of uncoordinated private transactions emerges the spontaneous order of the market. Free human beings freely interact, and the result is an array of goods and services more immense than the human mind can comprehend. No dictator, no bureaucracy, no supercomputer plans it in advance. Indeed, the more an economy is planned, the more it is plagued by shortages, dislocation, and failure.

It is commonplace to speak of seeing God’s signature in the intricacy of a spider’s web or the animation of a beehive. But they pale in comparison to the kaleidoscopic energy and productivity of the free market. If it is a blessing from Heaven when seeds are transformed into grain, how much more of a blessing is it when our private, voluntary exchanges are transformed – without our ever intending it – into prosperity, innovation, and growth?

Bottom Line: As you celebrate Thanksgiving on Thursday with your family and friends, remember to express some thanks and gratitude to the thousands of “invisible” strangers who won’t be there in person, but who were led by the “invisible hand” of the market over the last several months to become your “market benefactors” and make sure your affordable holiday feast was possible once again. I’ll end the post with a great, related quote from Ronald Reagan, who said:

The societies that have achieved the most spectacular, broad-based progress are neither the most tightly controlled, nor the biggest in size, nor the wealthiest in natural resources. No, what unites them all is their willingness to believe in the magic of the marketplace.

On Thanksgiving Day, I’ll remember to be thankful for the “miracle and magic of the marketplace” that is directly responsible for the economic prosperity that we enjoy not just on a single holiday once a year, but every day of the year.

Related: See recent CD post “Something to be thankful for: the cost of a 2017 Thanksgiving dinner is lower than last year and 23% lower than 1986.

Your Thanksgiving guide to explaining Trump to your liberal relatives - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Tue, 11/21/2017 - 14:24

Dear conservative reader,

I’m sorry about Thanksgiving 2013.

I got carried away. The Obama administration and seemingly every liberal website were putting out all these Guides To Explaining the Affordable Care Act to Your Conservative Uncle, and so I jumped in the game.

I offered you the “Thanksgiving guide to making conservative arguments liberals can understand.” It seemed like a good idea. You could sow some doubt about regulation by pointing out the food regs that Michael Pollan opposes. You could critique Social Security by pointing out its regressive redistribution.

Related reading:

But once you mentioned Monsanto, I’ve been told, it triggered a monologue from your nephew Trevor. I had no idea he would actually have a slideshow on his Macbook Air about genetically modified foods.

Aunts Carol and Linda did not take the Social Security criticism well, I heard. We probably shouldn’t have touched that third rail.

I learned my lesson, and I didn’t produce one of these guides for the last two years. Better to just avoid politics, I thought. It was smart.

@rmalo5aapi via Twenty20

But this year, avoiding politics just ain’t gonna happen. Your Baby Boomer aunts will be despondent. The glass ceiling was supposed to shatter this year. Trevor, who has been marching against Trump since Election Day, is even bringing the girlfriend he met at a Bernie rally in Oakland.

Trump will come up. You need to know how to handle it.

Limited, decentralized government

This is your chance to sell your liberal relatives on the virtues of limited government. They’ve never been into small government or Constitutional limits on executive or Congressional power. That’s all 1700’s stuff, man. The Constitution is alive, dude.

But now maybe you can sell some libertarianism to them.

“Do you want Trump, McConnell and Ryan having more say over your life or less?” Heck, even read the 10th Amendment to them — they may be warm to the idea that the federal government has only those powers explicitly granted to it by the Constitution.

Kate’s from California, and so you can pitch her on federalism. Wouldn’t it be good to shift power from Trump to Jerry Brown and Gavin Newsom?

Oh no. You said “states’ rights,” didn’t you? Don’t do that — that’s a trigger word. Now Aunt Linda is ranting about the “Alt Right,” and she has no idea what it means. Trevor’s bringing up Steve Bannon. This is going the wrong way. Bring it back.

Stick instead to the common ground. Kate and Trevor were Bernie volunteers. Mention how Trump is talking about a five-year ban on administration officials cashing out to become lobbyists. He’s taking on the special interests. He’s against TPP. They should like that.

“That’s a decent point,” Kate may say. “Besides, he’s better than Mike Pence.”

Resist the temptation to argue here. I know what you’re thinking: I can pitch the Religious Freedom Restoration Act in liberal terms of tolerance and plurality. Can’t we just live and let live? Embrace diversity man? What kind of gay couple caters their wedding with Midwestern pizza anyway? Ha!

Don’t do it. It’s a trap. You cannot make headway here. Just laugh it off.

No analogies

I hate to say “I told you so,” but I told you so. You went ahead and compared the contraception mandate to something else didn’t you? Like requiring Muslims to serve pork? You thought the multiculturalism angle would work, right?

Let me be clear: You May Not Make Analogies to Birth Control. This is like Rule No. 1 of arguing with liberal feminists. “Pork isn’t birth control,” may seem to be missing the point. It’s an analogy, you explain. Now you’re mansplaining literary devices to a BA from Oberlin who majored in critical lit? This is going off the rails.

You can hear the pinot noir fueling the guffaws from Aunts Linda and Carol. “Mansplaining!” they cheer. “What a perfect word!”

Take stock of your situation now. You’re about half a step from an abortion debate. I don’t need to tell you how that will end up.

Divide and retreat

Hiding in the bathroom was the right move.

You can still hear the aunts chortling. “‘Mansplaining!’ Love it!” while refilling their glasses. Trevor and Kate are out there talking about “Christian Supremacy.”

Related reading:

There’s only one move now: You have to make them fight each other. Then you can flee to safety.

Check out these emails published on WikiLeaks. Read them here. When you’ve finished, exit the bathroom and just drop the topic on the table: “Can you believe Donna Brazile was feeding the debate questions to Hillary? Did the DNC rig the primary or what.”

Now step back when the generational war erupts. Grab a beer. And if you get anymore questions, just say you voted for Gary Johnson.

Editor’s note: This article originally appeared on Washington Examiner’s website on November 24, 2016. It has been re-posted on for your reading pleasure.

Discussing Roy Moore: Carney on MSNBC’s ‘Morning Joe’ - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Tue, 11/21/2017 - 13:30
Visiting Fellow Tim Carney discusses the sexual harassment allegations against Senate-candidate Roy Moore (R-AL).

Hollywood CGI copyrights under fire in new technology lawsuit - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Tue, 11/21/2017 - 11:00

Could computer-generated characters belong to the creators of the underlying software and not to the studios that used it to generate the actual characters?

That specter now haunts Hollywood, where computer generated imagery (CGI) has come to play an increasingly important role in blockbuster movies, as a new lawsuit raises complex issues of technology, creativity, and intellectual property.

Via Twenty20

In July, a Silicon Valley company called Rearden LLC filed suit in federal court in San Francisco against Disney, Paramount, and 20th Century Fox, alleging that they used stolen technology — Rearden’s patented and proprietary CGI program called MOVA — to create characters in numerous popular films. The lawsuit seeks royalties for the copyrights in those characters, over which Rearden claims ownership.

Specifically, Rearden claimed in a press release that MOVA:

has been used in films to capture the most subtle facial performances from actors such as Brad Pitt in The Curious Case of Benjamin Button, Jeff Bridges in Tron: Legacy, Mark Ruffalo as the Hulk in The AvengersDaniel Radcliff and Rupert Grint in Harry Potter and the Deathly Hallows, Parts 1 and 2, and many other blockbuster movies.

The software empowers video effects engineers “to project the actors’ captured facial performances onto computer generated (CG) faces bringing the CG characters to life.” (Full disclosure: Rearden’s founder is my wife’s distant cousin.)

More specifically, Rearden alleged that its technology:

enabled studios to show Brad Pitt as an 87 year-old man, project Mark Ruffalo’s facial performance onto the Hulk’s face, show Jeff Bridges as he had appeared almost 30 years ago in the original TRON film, and transform Rupert Grint’s face into Daniel Radcliff’s in Hallows. ButtonTRON: LegacyAvengersHallows 1 and 2, and ten other films that hired Rearden for facial motion capture have collectively earned major motion picture studios $9.5 billion worldwide in box office alone.

Rearden seeks a portion of that nearly-ten-billion-dollar kitty as royalties for the copyrights created by MOVA and marketed without authorization by the studios. The original complaint was fairly complex, involving alleged trade secret misappropriation and possible industrial espionage by a Chinese technology company.

But a more interesting question arose last month after the studios moved to dismiss the complaint in its entirety.

Learn more:

Fox, Paramount, and Disney claimed that even assuming everything Rearden claimed is factually true, no legal authority exists supporting the proposition that the copyrights on the CG characters belong to the software developer. If true, the studios insisted, “then Adobe or Microsoft would be deemed to be the author-owner of whatever expressive works the users of Photoshop or Word generate by using those programs.” Such a ruling would have far-reaching implications indeed.

Rearden dismissed this analogy out of hand, however, responding instead by pointing to a recent case involving Michael Drosnin’s controversial book The Bible Codes. There, Drosnin used software designed to analyze the Hebrew characters in the Torah (the portion of the Old Testament also known as the Pentateuch, or First Five Books of Moses) to discern textual patterns and then published the resulting matrix. The software developer successfully sued Drosnin, claiming to own the copyright on the matrix itself. In the key passage, a New York federal court held that:

an end-user’s role in creating a matrix is marginal. Creating a matrix is unlike the creative process used in many computer art programs, which permit an end-user to create an original work of art in an electronic medium. It is fair to say that users of such programs often supply the lion’s share of the creativity to create the screen display. By contrast, an end-user of the Software merely inputs a word or phrase which the Software searches for in the Database. Thus, the Software does the lion’s share of the work. Indeed, Drosnin’s inputs, generally consisting of no more than a single word or phrase, would fail to meet the minimum threshold of originality. In short, Drosnin is not the author of the matrixes.

Here, Rearden claims that, like Drosnin, the visual-effects engineers at the studios simply input stock, predictable parameters into MOVA, and any creativity inhering in the resultant characters belongs to the software developer, who performed “the lion’s share of the work,” or, in Rearden’s phrasing, “substantially all . . . of the operations required to produce the outputs.”

For their part, the studios argue strenuously that their VFX whizzes are far more than peons, mindlessly entering inputs into the magic MOVA machine, and that any originality in the various CG characters should rightfully be attributed to their (and the director’s and screenwriter’s) skill and creativity.

The decision could have a massive impact on Hollywood, where more and more films have come to rely on CGI, with great financial success.

Ultimately, the court will have to decide which analogy best fits this case: Photoshop manipulators or Bible code processors? We’ll find out soon enough.

Learn more:

Yes, the Clintons should be investigated - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Tue, 11/21/2017 - 00:00

President Trump’s critics are arguing that GOP calls for the Justice Department to investigate Hillary Clinton and Democrats’ ties to Russia are an effort to distract from the real Russia investigation, into potential Trump-Russia collusion.

No, they are not.

Ever since Watergate, the mantra of all major corruption investigations has been to “follow the money.” Well, Americans of all political stripes should be outraged by the fact that both Democrats and Republicans in Washington are up to their eyeballs in Kremlin cash. Russian money found its way into the pockets of not only Trump advisers like Paul Manafort and Rick Gates — who were recently indicted by special counsel Robert S. Mueller III — but also Democratic power lobbyist Tony Podesta, Bill Clinton and the Clinton Foundation.

This should suggest to objective observers that Russia was using its money to influence both sides in order to advance the Kremlin’s interests. And it means that any full and impartial investigation of Russia’s efforts to influence our political process needs to follow the Russian money flowing into the coffers of the Clintons, their foundation and their top associates.

The New York Times reported in 2015 that “shortly after the Russians announced their intention to acquire a majority stake in Uranium One, [former President Bill] Clinton received $500,000 for a Moscow speech from a Russian investment bank with links to the Kremlin that was promoting Uranium One stock.” In total, $145 million went to the Clinton Foundation from interests linked to Uranium One, which was acquired by the Russian government nuclear agency Rosatum.

Think that was just a coincidence? As former federal prosecutor Andy McCarthy points out, the Uranium One deal is not a national security scandal, it is a corruption scandal involving “Clinton family self-dealing.” Ask yourself: How many half-a-million-dollar speeches has Bill Clinton given to Kremlin-linked banks since Hillary Clinton was defeated? How much Russian money is flowing into the Clinton Foundation’s coffers today? If Donald Trump had given a $500,000 speech paid by a Kremlin bank, and his private foundation had accepted $145 million from Putin-linked oligarchs and their Western business partners, do you think that his critics would be insisting there was nothing to see here?

Then there is Tony Podesta. It is now front-page news that Podesta has been forced to step down from his soon-to-be-defunct lobbying firm, the Podesta Group, after being ensnared the same scandal that led to the indictment of Trump campaign aides Manafort and Gates. The Podesta Group failed to register as a foreign agent for Russian interests while lobbying on behalf of the European Center for a Modern Ukraine — a front group that Mueller’s indictment says was “under the ultimate direction” of Ukraine’s Putin-backed president and his political party.

We should all be deeply concerned how much Russian cash was sloshing around Washington, and how much of it found its way into the bank accounts of the Clintons and those around them. And we should all, Democrats and Republicans alike, want to get to the bottom of it.

As Americans, it goes against our sensibilities to encourage the Justice Department of one party to investigate the vanquished candidate of the other party. But does the fact that Clinton lost mean Americans don’t deserve to know the full extent of Russia’s efforts to influence our political process?

None of this absolves the Trump campaign or calls into question the intelligence community’s conclusion that “Putin and the Russian Government aspired to help . . . Trump’s election chances.” But it does underscore that the Russians were smart in what the intelligence community calls their efforts “undermine public faith in the US democratic process.” They played both sides, and in so doing preyed on the singular weakness of the Clintons and those around them — greed.

Any impartial investigation of Russia’s efforts to meddle in our democratic process needs to include a full inquiry of the Russian money flowing into Clinton world. Such an inquiry is not a distraction. It is critical to restoring public faith in American democracy.

Communism didn’t just hurt communist countries - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Mon, 11/20/2017 - 21:21

On the hundredth anniversary of the Bolshevik Revolution in Russia this month, Douglas Murray points out in National Review that too many people in the West have already forgotten the crimes of communism:

But what are the consequences of societies with so little memory of 20 million deaths in the USSR? Or the 65 million deaths caused by efforts to instill Communism in China? If those 65 million Chinese deaths cannot detain us, what are the chances that anyone will care about the 2 million deaths in Cambodia? The million in Eastern Europe? The million in Vietnam? The 2 million (and counting) in North Korea? The nearly 2 million across Africa? The 1.5 million in Afghanistan? The 150,000 in Latin America? Not to mention the thousands of murders committed by Communist movements not in power, a number that could almost seem meager compared with the official slaughter?

These are good questions, but our collective amnesia isn’t confined to the West. Nor were people in communist countries the only ones who suffered the baleful consequences of Lenin’s successful putsch in 1917.

See also:

In my most recent Wall Street Journal column (read it here), I argue that outside the communist world communism hurt no country more than India. If the subcontinental giant houses more poor people (268 million according to the World Bank) than any other country, it’s in part because India’s leaders — like so many others in the post-colonial world — looked upon the Russian Revolution with fondness rather than horror.

Deeply influenced by both Fabian socialism and the Soviet experience of industrialization, India’s first prime minister, Jawaharlal Nehru (1947-64), and his daughter, Indira Gandhi (1966-77 and 1980-84), turned India into one of the most dirigiste economies outside the formally communist world.

As a reminder of the damage this did, it’s worth watching the episode below from Milton Friedman’s 1980 television series Free to Choose. Contrasting India’s sclerotic socialist economy with Japan’s thriving capitalist one, Friedman reminds viewers that “central planning in practice has condemned India’s masses to poverty and misery.”

Since embracing economic reforms in 1991, India has rapidly recovered from its four-decade-long tryst with socialism. But though democratic India was lucky to escape the worst communist horrors — no gulags, no show trials, no mass starvation deaths by man-made famine — this has also meant that the country has failed to make a clean break with the past. Reforms have progressed only fitfully, and even now it’s not uncommon to read paeans to Indira Gandhi, arguably the most destructive post-colonial leader of any democracy.

In short, India may have dodged the worst of communism’s excesses. But the ideology’s malign shadow has not entirely disappeared.

Learn more:

Read the full column:

Never-Trumpers never agree about anything else - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Mon, 11/20/2017 - 19:23

President Donald Trump still has vocal Republican detractors. But they are laboring under two problems. The first, which has received a lot of attention, is that there aren’t a lot of them. In the latest Gallup poll, Trump has the approval of 82 percent of Republicans.

The second, which has received less attention, is that this minority of Republicans is divided.

It’s divided on policy issues. Bret Stephens, Max Boot and Charles Sykes are all right-of-center commentators who want Republicans to dump Trump. But they also want gun control, sometimes of a sweeping nature. Other frequent Trump critics on the right, such as Erick Erickson and David French, want no part of that agenda.

Immigration is another dividing line. Jennifer Rubin says that calls to reduce low-skilled immigration are bigoted and demagogic. Fellow anti-Trump columnist Ross Douthat leans to the other side. Rubin is a sharp critic of the congressional Republican tax bill. The Weekly Standard, which has an anti-Trump editorial line, lauds that bill.

Or take health care. Senator Mike Lee of Utah, who refused to endorse Trump, was wary of the main Republican bills because they did not go far enough in repealing Obamacare. Governor John Kasich of Ohio, another non-endorser, opposed them because they went too far in repealing it.

Should Republicans moderate on social issues? Embrace a more populist message on economics? Reject nationalism or try to ennoble it? You’ll find conservative anti-Trumpers on both sides of each question. Republicans who generally oppose Trump don’t even agree on what to call themselves. Many of the people who embraced the Twitter hashtag #NeverTrump last year think the term is obsolete, since it referred to never voting for him and the election is over.

Conservatives who generally oppose Trump don’t agree on how he got the nomination, either. Some of them think he got it because Republican politicians had betrayed grassroots conservatives by not fighting hard enough for their causes. Others think he got it because too many Republicans encouraged unrealistic expectations among conservative voters. Yet others point to a Republican agenda that was too focused on rich people and big business.

One thing that uncontestably helped Trump get the nomination: the division among his Republican opponents. Moderate-right anti-Trumpers were unwilling to leave Kasich for Ted Cruz, and hard-right anti-Trumpers were unwilling to leave Cruz for Kasich.

These divisions continue to impede practical cooperation among conservative Trump critics. The more conservative anti-Trumpers want to maintain what influence they have left among conservatives. They want to prove that a conservatism independent of Trump exists.

They worry that the more moderate anti-Trumpers are making it seem as though the opposition to Trump isn’t all that conservative. The conservative anti-Trumpers generally also think that it is important to praise Trump when he takes actions with which they agree, both as a matter of fairness and to avoid being written off as knee-jerk critics.

A group of conservatives and libertarians recently released a statement opposing the dismissal of special counsel Robert Mueller or the issuance of pardons to shut down his investigation. Some on the right who agreed with the sentiment declined to sign it because the statement was associated with the more liberal faction. The statement, they feared, made support for the investigation seem like part of a project of moving the Republican Party left.

The major point of agreement among Trump’s conservative critics is an important one: They think that he doesn’t have the character to lead the country well. But that agreement is not a substitute for having a clear and unified sense of where they want the Republican Party, and the country, to go. They don’t have that, and they don’t even seem to see how quixotic it makes their dream of wresting the party back from the man who is their common enemy.

Trump’s Iran strategy needs much improvement - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Mon, 11/20/2017 - 14:34

From Saad Hariri’s resignation as Lebanon’s prime minister to the Houthi missile attack on Saudi Arabia, the Middle East is again in uproar, thanks to the acute Iranian threat America’s regional partners perceive. Without a U.S.-led initiative to limit Iran’s regional sway, U.S. allies will act on their own and escalate regional crises.

That’s why the Iran policy the Trump administration rolled out last month is important. It’s an effort to forge a comprehensive strategy. Its smartest aspect is that it recognizes that merely curbing Tehran’s nuclear ambitions won’t end its aggressive behavior across the region. But there are good and bad ways to push back against Iran, and the administration so far seems focused on the bad. Syria and Iraq are the places to execute an Iran strategy effectively—not Yemen or Lebanon, and certainly not over the nuclear deal.

Iran has gone all-in on Syria, and while it is winning, it is also badly overexposed. It cannot afford to let the Assad regime sink, risking the demise of Hezbollah and the dissolution of Tehran’s hard-won position in the northern Levant.

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No, the House tax bill won’t destroy graduate education - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Mon, 11/20/2017 - 14:31

The tax reform bill passed by Republicans in the House of Representatives on Thursday contains a provision that would, according to various news outlets and op-ed writers, “bankrupt graduate students,” “be a disaster for PhD students,” and “hit grad students with a massive tax hike.” To modify a saying dubiously attributed to Mark Twain, predictions of the death of graduate education have been greatly exaggerated.

On the chopping block in House Republicans’ bill is section 117(d) of the Internal Revenue Code, which exempts qualified tuition waivers from taxation. Many graduate students work as teaching or research assistance while completing their studies; universities often waive their tuition and provide a small living stipend as compensation. The House plan would treat these tuition waivers as taxable income, which graduate students fear could lead to annual tax hikes of several thousand dollars.

Anxiety among graduate students and those considering graduate education is understandable. But what the narrative around this provision has missed is that the House bill does not touch another provision of the tax code: section 117(a).

This section provides that scholarships used to pay tuition and fees are not considered taxable income. The catch is that universities which provide these scholarships cannot stipulate that students work as teaching or research assistants as a condition of receiving them. This is the main difference between scholarships and qualified tuition waivers: universities can require students to work as a condition of receiving the latter, but not the former.

Under current law, both scholarships and tuition waivers are not taxable. But the House bill draws a distinction between the two. Under the proposal, universities can still reduce their students’ tuition bills without incurring tax consequences. However, if graduate students work as teaching or research assistants as a condition of getting that tuition help, then the amount of tuition reduction would be considered taxable income.

Universities that wish to avoid saddling their graduate students with large tax bills therefore have an easy way out. They can reclassify their qualified tuition waivers as scholarships, and avoid incurring any tax consequences. Because schools have this alternative method of providing tuition help, it is unlikely that many graduate students will see tax hikes if the House bill becomes law.

To be sure, universities could no longer force graduate students to work as teaching or research assistants in order to receive the scholarships. But many graduate students would work in these positions anyways in order to receive a living stipend. (Those stipends are already taxable under current law.) Universities, wanting to attract talented graduate students, will structure their aid packages in such a way as to minimize the tax consequences for students.

True, this could alter the current model of graduate education. But it would not destroy it.

All this raises the question of why, if universities and graduate students can so easily avoid the tuition waiver tax, House Republicans decided to include it in their bill at all. At some level, the provision makes sense: since graduate students receive tuition waivers as a condition of work, the waivers should be considered income for tax purposes. Since scholarships are not conditioned on work, they are more analogous to buying a product at a discount and thus should not be taxed.

The problem with that justification, though, is that the tax reform bill ignores other untaxed benefits that employers provide their workers, such as health insurance. It’s logically inconsistent to tax small, niche benefits such as tuition waivers, but ignore massive, widespread benefits such as employer-provided health insurance. If Republicans want to treat fringe benefits as taxable income, fine—but they should be consistent about it.

House Republicans have yet to offer a convincing justification for their proposal to tax tuition waivers. On the other hand, though, critics of that proposal are vastly exaggerating its consequences. The House proposal to tax tuition waivers won’t destroy graduate education. That doesn’t mean there’s a good reason for it.

Why won’t the Trump administration do anything about dodgy Indian drugs? - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Mon, 11/20/2017 - 14:25

It is somewhat surprising to see that the Trump administration can be strategic, given the almost daily knee-jerk responses of the commander-in-chief.  But when it comes to geopolitics in Asia it knows what it wants — kind of.

US President Donald Trump holds a bilateral meeting with India’s Prime Minister Narendra Modi alongside the ASEAN Summit in Manila, Philippines November 13, 2017. REUTERS/Jonathan Ernst

While North Korea is volatile, China is the real challenge, some would say threat, from intellectual property (IP) theft and economic fights to saber-rattling over Asian security. So while India strains corporate relations due to IP theft and risks health due to dodgy quality medicines (see my latest paper out today), it is increasingly the strategic partner of choice in the region. After all, it’s hard to sustain tension with the two most populous countries in the world at the same time.

Prime Minister Modi may be a bully, who uses criminal defamation to silence opponents, but he talks a good game when it comes to the partnership with the US. In fact, he echoes our own president in prioritizing rhetoric over reality. He has many supporters within the White House and in Congress who overlook the relatively minor issues the US has with India, at least as far as they are concerned, defending such actions as strategic thinking.

This week we’ll see whether the Trump administration can publicly combat bad Indian policy. The Indian Government and the World Health Organization are cosponsoring an event on medicines and IP. This event timed over Thanksgiving is designed to beat up on innovator drug companies and their expensive medicines. Most of the research and development for these medicines is done in the US, and the best defenders of them will not be in attendance due to the Thanksgiving holiday.

Even more than India’s Government, the WHO is a truly socialist organization. And like many socialists it is hypocritical. The first to demand taxpayer-funded health care for all and high taxes, many of its staff avoid paying any federal taxes. But the WHO’s largest funder is the US taxpayer. The new head of the WHO, Dr. Tedros Ghebreyesus, has backtracked on one policy (of making despotic Zimbabwean President Robert Mugabe an ambassador) due to donor pressure and could possibly do so again. The White House should complain about the content and timing of this major conference and stress that funding for its socialist agenda will be stopped immediately.

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America’s national debt will never, ever go down - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Mon, 11/20/2017 - 14:22

Democrats think they have the GOP’s big plan all figured out. First, Republicans pass a big, fat tax cut that worsens budget deficits. Then, expressing alarm about worsening budget deficits, Republicans try to slash entitlements. Fiendishly clever, yes?

“This is a nasty two-step strategy that has long been the Holy Grail for hard-right Republicans,” Senate Minority Leader Chuck Schumer (D-N.Y.) told The New York Times.

It isn’t crazy conjecture. If made law, the new Senate Republican tax bill could boost the national debt to nearly the size of the entire U.S. economy by 2027, with levels heading even higher if expiring individual tax cuts get made permanent. And top Republicans such as House Speaker Paul Ryan and House Ways and Means Chairman Kevin Brady are already saying entitlement reform is next. As an influential GOP economist recently wrote in The Wall Street Journal, “The challenge for the Congress after the next election will be to start reversing the rise in the debt.”

But they are not going to reverse the rise in America’s national debt. No one is.

If Republicans really cared about deficits and debt — during the Obama years they claimed the big federal budget gap could spark another financial crisis — they could have flatly rejected any tax plan that reduced government revenue. To now count on entitlement reform to make up the difference is hardly a second-best solution. Messing with Medicare and Social Security is even more politically treacherous than the failed attempt to repeal ObamaCare, given the GOP’s dependence on older voters.

Moreover, President Trump has repeatedly put those programs off limits. Sure, White House economic adviser Gary Cohn recently said that reforming “welfare” could be on the agenda — but only after fixing regulation, taxes, and infrastructure. So more of a tomorrow thing, if ever, because nothing will likely happen without strong presidential leadership. And Donald “I’m the king of debt, I love debt” Trump has given little indication that he has evolved into a budget hawk. Finally, it is hardly likely that congressional Republicans will have more political power after the 2018 midterm elections than they do right now.

Now consider this: It’s a realistic possibility that after eight years of Trump — more often than not, presidents win re-election — a Democrat takes office in 2025 at a time of trillion-dollar budget deficits and a historically high national debt. What would that Democratic president do? Show the fiscal rectitude Republicans didn’t and reduce the debt? Of course not. Unless financial markets force them, Democrats will likely make up for lost time and spend big on their priorities, whether free college tuition or a universal basic income or high speed rail. They might tax the rich a lot more, but that probably won’t be enough to reverse that rising tide of red ink. What’s more, a growing number of progressive wonks really don’t think high debt levels are much of a problem as long as that borrowed money is being spent on programs they think effective. So don’t fixate on debt-GDP ratios.

In other words, Washington simply doesn’t care about cutting the debt burden. Did it ever? Sure. Back in the 1990s, both parties saw slashing debt as a fiscal imperative. Today, though, both parties are preparing to run an economic experiment on the world’s largest and most advanced economy. Most economists, however, would say this is an unnecessary gamble that will likely end in tears — and much higher taxes.

The GOP is right to ignore pay-as-you-go - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Mon, 11/20/2017 - 12:51

The Congressional Budget Office (CBO) reported last week that the GOP plan to cut taxes by $1.5 trillion over 10 years would trigger automatic spending cuts under the Statutory Pay-As-You-Go Act. This includes a $25 billion reduction of what Medicare pays providers for medical services. Republicans are right to ignore, for now, this potential effect of their tax legislation, as they had no role in the enactment of the pay-as-you-go law in the first place and can fix the problem later. It was House and Senate Democrats who rammed the pay-as-you-go legislation through Congress in 2010 just as they were about to lose their supermajority.

Democrats today complain about the partisan approach Republicans have taken on health care and taxes. They seem to have forgotten how they ran Congress in 2009 and 2010.

During the first months of the Obama administration, the Democrats had a supermajority of 60 votes in the Senate. That sizeable majority allowed them to pass legislation, including the Affordable Care Act (ACA), without any Republican votes. But then the unthinkable occurred. On January 19, 2010, Republican Scott Brown stunned the political world by winning a special election to serve out the remainder of Sen. Ted Kennedy’s Senate term. Kennedy, who passed away in August 2009, had been replaced on a temporary basis in September 2009 by Paul Kirk, who was appointed by then-Massachusetts Gov. Deval Patrick, also a Democrat.

After Brown’s victory, the Obama administration and congressional Democrats knew they would soon lose their supermajority in the Senate. That would mean they could no longer pass legislation under regular order without securing some Republican support. With 41 votes, Republicans would be able to filibuster bills they disliked, except for legislation passed using budget reconciliation legislation, which requires only a simple majority.

Although Brown was elected on January 19, he wasn’t sworn in and seated until February 4. In the interim, Sen. Kirk continued to serve in the Senate. This delay wasn’t unusual, but it proved to be important.

On January 20, just one day after Brown’s victory, then-Senate Majority Leader Harry Reid called up legislation to increase the federal debt limit by $1.9 trillion.  That legislation was then amended to include the Statutory Pay-As-You-Go legislation before it passed in the Senate on January 28. The legislation was considered under “regular order,” meaning it was not a budget reconciliation bill. (Budget process changes cannot be passed easily through reconciliation because they generally do not directly affect federal spending or revenue, which means they are vulnerable to removal from those bills under the Byrd Rule.) Statutory Pay-As-You-Go passed in the Senate on January 28 with all 60 Democratic Senators, including Sen. Kirk, voting in favor of it. All Senate Republicans voted against the legislation. The House took up the bill a few days later and passed it, again without any Republican support.

The pay-as-you-go legislation of 2010 put into statute a budget process rule that has been operating off and on since 1990. The premise of the law is that Congress should be precluded from passing legislation that increases federal budget deficits above the levels that would otherwise occur. So, for example, if members of the House and Senate want to pass a bill increasing spending by $100 billion over 10 years, they must include offsetting spending cuts or tax increases equal to or exceeding $100 billion.

In 1990, Congress put the first pay-as-you-go rule in place as part of a five-year budget agreementstruck between President George H.W. Bush and the Democratic majorities in the House and Senate. The rule was enforced with a “sequester.” The way the sequester works is that the Office of Management and Budget (OMB) assesses the budgetary effects of all legislation passed each year in Congress. If Congress passes bills during the year that, in total, increase the deficit, then the OMB is required to impose an across-the-board spending cut on unprotected programs to generate savings sufficient to cover the breach.

Unlike earlier versions of statutory pay-as-you-go, the 2010 legislation was permanent and was not put in place to enforce a budget framework. In 1990, President Bush and Congress created the pay-as-you-go concept to lock in place a mix of spending cuts and tax increases intended to reduce the budget deficit. Initially, pay-as-you-go was limited to the five-year period of that budget agreement (1991–1995). The 2010 law, by contrast, was enacted by Democrats to preclude a future GOP-controlled Congress from passing an unfinanced tax cut. In other words, that law was aimed squarely at trying to prevent Republicans from passing a tax cut just like the one that is now moving through Congress.

Democrats sometimes argue that pay-as-you-go is nonpartisan because it is equally tough on unfinanced spending and tax cutsBut that is not quite right. Pay-as-you-go is fine if there is an agreement between the parties on the overall level of taxes and spending. But sometimes there is a legitimate disagreement about the size of government. Democrats often want to increase the size of government, and they are happy to do that by increasing both taxes and spending, which is consistent with pay-as-you-go. Republicans believe a more circumscribed government is better for economic growth over the long-run, and sometimes the best approach to limiting the reach of government is by lowering the overall level of taxation, accompanied by spending restraint. (Although that spending restraint may be less than the tax cut and may come in appropriation bills that are not counted under pay-as-you-go.) President Reagan’s tax cut in 1981 was aimed at promoting economic growth and restraining government. If the Democratic party had its way, statutory pay-as-you-go would preclude future congresses from ever again passing a Reagan-style tax cut. Republicans will never agree to that — and shouldn’t.

The irony is that the pay-as-you-go law passed by Democrats in 2010 might give the GOP new leverage in the budget process over the coming months. If Republicans succeed in passing a 10-year, $1.5 trillion tax cut, the enforcement of pay-as-you-go will require across-the-board spending cuts to eliminate the added annual deficits from lower federal revenue, starting with cuts in funding in 2018. (The GOP cannot undo the pay-as-you-go implications of the tax bill with a simple waiver provision, because under reconciliation rules, the waiver would be subject to the Byrd Rule and would thus need 60 votes to survive.) These spending cuts will hit Medicare and other unprotected programs, including the operating budgets of many federal agencies. Congressional Democrats will not want these cuts to go into effect. But they can’t stop them without Republican cooperation.

The net effect, then, of passing an unfinanced tax cut in the era of pay-as-you-go may be to create added pressure for bipartisan spending restraint to partially offset a Republican-inspired tax cut. That is surely not what Democrats had in mind when they rushed the pay-as-you-go law through the Senate in the early days of 2010.

The impact of legislative change on reported domestic violence against women in India - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Mon, 11/20/2017 - 12:32

Abstract: This paper investigates whether two legislative changes aimed at empowering women did in fact lower the risk of domestic violence for women in India. We use the National Family Health Survey, a nationally representative household dataset to explore this issue. We exploit a legislative change geared at improving the political representation of women by reserving at least one-third of seats in the local Panchayats for women. The change to representation was implemented at different dates depending on the timing of elections. The second change is a natural experiment wherein five states made amendments to their inheritance laws allowing daughters equal status as sons in the right to inherit the joint property of the father. We use this arguably exogenous variation to study whether the improvement in women’s autonomy in these states as a result of the passage of this law had any impact on the likelihood that they report being victims of domestic abuse. Our results suggest that improved representation increased the reported probability of violence. There are two competing explanations for these results. First, women may have experienced retaliation by men who feared the erosion of their power and opposed the policy change. Second, the policy change may have made women more willing to report violence to interviewers.


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Should Washington break up Big Tech? - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

Mon, 11/20/2017 - 11:00

The past year has seen a strange convergence of left and right on one topic: growing fear of Silicon Valley’s leading firms. A few headlines will tell the tale. From Axios: “Tech’s new Washington problem: Democrats.” From The Intercept: “Steve Bannon Wants Facebook and Google Regulated Like Utilities.” Vox: “Elizabeth Warren wants the government to crack down on technology giants.” Breitbart: “Tucker Carlson: Google should be regulated like the public utility it is.”

Twitter Acting General Counsel Sean Edgett, Facebook General Counsel Colin Stretch and Google Senior Vice President and General Counsel Kent Walker are sworn in before the House Intelligence Committee to answer questions related to Russian use of social media to influence U.S. elections, on Capitol Hill in Washington, U.S., November 1, 2017. REUTERS/Aaron P. Bernstein

I could go on. The point is the momentum behind those calling for government to take some sort of action against Big Tech is palpable, which is odd when you consider public opinion on this issue. As I wrote in a recent column in The Week, most Americans remain pretty friendly toward the tech titans.

As noted by Wired, Amazon, Facebook, and Google continue to have high favorability ratings, according to public opinion surveys. Research firm Morning Consult finds Google with an 82 percent net favorability rating, Amazon 77 percent, and Facebook 60 percent. That’s not even frenemy territory. Those companies are also among the most widely admired by Americans aged 18-34. What’s more, there’s been no apparent change in the “brand health” of Big Tech over the past year, as measured by the YouGov BrandIndex. All that despite a year of terrible headlines, whether it’s Russians using Facebook to influence the US presidential election, sexism at Uber, free speech issues at Google, or more existential concerns that artificial intelligence and robots will destroy the human job market.

In other words, the fervor for targeting these companies remains mostly an elite-level phenomenon, at least for now.

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Which isn’t to say it’s unwarranted. The most common objections to these tech titans have some prima facie appeal: Critics may argue that the sheer size of these firms harkens back to the robber barons of the last century, or that their market dominance may be stifling innovation, or that Google’s and Facebook’s ubiquitous presence in our lives suppresses free speech. And then of course there are the worries about Russia: Maybe these firms are a danger to something more fundamental than just innovation or a more equal income distribution. Perhaps they’re a threat to American democracy itself.

Those are some of the prominent gripes against Big Tech, anyway. But I’m not necessarily sold yet. As I’ve argued elsewhere, looking at the past decade, about the only thing that seems to have really gone right in the US economy is what’s happening in Silicon Valley. The success of these big companies has brought amazing products and services to consumers, and we’ll want further innovations from them in the future. So maybe the government should hold their fire. Better to tread carefully than have politicians mucking about highly innovative and evolving business models they don’t fully understand.

This debate is the topic of an upcoming event here at AEI on November 27, beginning at 1:30 PM. Joining me for a panel conversation will be MIT’s Andrew McAfee, research scientist and co-author of Machine, Platform, Crowd; Luigi Zingales, director of the Stigler Center at the University of Chicago; Ryan Hagemann, Director of Technology Policy at the Niskanen Center; and Michael Strain, John G. Searle Scholar and Director of Economic Policy Studies here at AEI. You can find more details and RSVP at this link, here. We hope you can join us.

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