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Neal McCluskey

A new Government Accountability Office report on the Biden administration’s student debt cancellation bonanza, which was struck down by the Supreme Court in June, says the administration was doing too little to protect taxpayers:

Education developed two processes to assess borrower incomes and account for fraud risks, but did not implement key procedures to further identify and prevent potential fraud. For example, the department approved millions of applicants before fully implementing processes to review and evaluate fraud risk, such as collecting income information from the other borrowers it had selected for verification or assessing the borrowers it had approved. In addition, the department automatically approved some borrowers based on self‐​reported data, without conducting any additional assessment of borrower risk.

This sounds like an administration in a hurry, which is certainly how the cancellation felt. After a year and a half of reaching no conclusion about mass cancellation, on August 24, 2022, Biden declared that he was good to go. By mid‐​October, as various groups scrambled to mount a legal defense against the unconstitutional $430 billion action, the Department of Education started taking—and approving—applications.

In response to the GAO, the Department says it did enough to block fraud, and would have done more had a court—perhaps unexpectedly—not issued an injunction against the cancellation effort. The administration says it knew who the vast majority of applicants were, so the fraud threat was minimal. To this, GAO responded that even if a small share of applications were fraudulent, that could still seriously add up in a $430 billion action. It is also a little hard to feel assured that the Education Department really knew all about its borrowers, since a 2022 GAO report found that the department had major record‐​keeping problems. Indeed, that incompetence is part of the justification for $39 billion in cancellation the Biden administration recently declared.

This is all part of a larger pattern of the Biden administration canceling student debt left and right in ways largely inscrutable to the public and, at least in some cases, almost certainly unconstitutional. Indeed, the same day the Supreme Court declared Biden’s jubilee unconstitutional, the president announced his administration had “finalized” a new, very generous repayment program. No act of Congress—the people’s representatives. Just Biden begetting a repayment plan expected to cost taxpayers $475 billion over ten years. Meanwhile, other repayment‐​easing endeavors are working through heavily biased regulatory procedures.

The new GAO report highlights the dangers that were in Biden’s gold rush for student borrowers. But more broadly, it helps illuminate the reality of policymaking unmoored from basic constitutional processes: the diffuse people who will pay the costs—taxpayers—are afterthoughts.

Jeffrey A. Singer

Shannon Najambadi reports for the Wall Street Journal about the growing problem of “ambulance deserts.” In many parts of the US, ambulance services are so scarce that people may need to wait an hour or longer for an ambulance to arrive. According to a recent study by the University of Southern Maine’s Muskie School of Public Service Rural Health Research Center, 4.5 million Americans live in an ambulance desert, and 2.3 million in rural counties. The researchers define an ambulance desert as “a populated census block with its geographic center outside of a 25‐​minute ambulance service area.”

The study found that roughly 80 percent of counties in the US have ambulance deserts, but rural counties were more likely to have an ambulance desert than urban counties. The counties with the highest share of ambulance deserts were in the Appalachian regions of the South.

The Wall Street Journal article reports that more than fifty‐​five ambulance services have closed nationwide since 2021. In many cases, the ambulance services have had difficulty hiring people willing to train for this high‐​pressure job at their own expense. Adding to the problem is that the ambulance business can often be unprofitable. For example, service providers in rural areas make fewer calls per year than in urban areas, often traveling longer distances with higher fuel costs.

While not responsible for this problem, state Certificate of Need (CON) laws do not help matters. These laws require organizations that offer health care facilities or services to get permission from a state commission—usually consisting of or strongly influenced by competing incumbents— to enter the health care market.

In effect, a certificate of need is a permission slip to compete. Constitutional scholar Christina Sandefur of the Goldwater Institute refers to CON laws as a “competitor’s veto.” During the COVID-19 pandemic, many states temporarily suspended their CON laws to get the government out of the way of hospitals and other providers scaling up to meet emergency demand.

Arizona, where I reside and practice medicine, repealed its CON law in 1990. But it retained the “Certificate of Necessity” requirement for ambulance services. Arizona has a large rural population, with some towns hundreds of miles from a major town or urban center. According to the Central Arizona Fire and Medical Authority, ambulances could not respond to emergency calls 400 times in Prescott and surrounding areas during four months in 2021.

Kentucky, a state with a large rural population containing parts of Appalachia, has CON laws extending over a large swath of the health care sector. The University of Southern Maine study states that 91.7 percent of its counties have ambulance deserts.

There is no simple fix to America’s ambulance desert problem. Its causes are multifactorial. However, one way state lawmakers can help is by repealing their Certificate of Need laws so providers no longer need permission from their competitors before they can offer services to patients.

Colleen Hroncich

Jackie Gallo’s daughter started kindergarten in fall 2019. “She was doing okay, but I could see the ways that her needs weren’t being met,” says Jackie. Some of the best aspects of her personality weren’t allowed to shine or grow. “It’s like her fire was being put out—and five years old is way too early for that to happen.”

Then COVID-19 struck and the schools shut down. Jackie had started a family‐​wellness space that focused on mindfulness. She did a lot of after‐​school programming and says she’d already seen “a need outside of the school system for a place where children could unwind from the day.” But COVID-19 restrictions prevented her from doing her regular programs. And her husband worked in emergency medicine and told her the restrictions were going to last way longer than two weeks.

Roots Academy was formed from this collision of three things: Jackie had a space that was built for kids, her daughter didn’t have a great experience in kindergarten, and COVID-19 restrictions were causing upheaval. “I found somebody to co‐​facilitate and co‐​teach with me and found five other families for a total of six kids in our first year,” Jackie recalls. “Everybody just wanted our children to have a bit of normalcy and be okay. So there was really low pressure on us that first year.”

Despite the lowkey approach they took that first year, they discovered the kids were still learning—and in really interesting and exciting ways. Plus, they were learning things in less time, which allowed them to spend more time outside and active. “During that time period, a lot of pieces started to click into place for me,” says Jackie.

“It’s really hard to go back into a system that wasn’t working for you,” she adds. “So the next year we moved into a larger space and went from six kids to twelve elementary students. And we’ve kind of grown from there. We’ve added a grade a year. It’s really this living, breathing entity that continues to grow and evolve to support the families that find their way to our community.”

Currently serving grades K‑5, Roots Academy is recognized by the state of Maine as a private school providing equivalent instruction. The twenty‐​five full‐​time students in the microschool are considered private school students. But Jackie takes a flexible approach to her offerings, and some homeschool students attend the outdoor component for enrichment. There are also children from the local public schools that come for afterschool programming.

Jackie’s background is in economics and biology, not education, and she says that has helped her structure Roots in a way designed to meet the needs of children and families. Her previous work in clinical science research involved determining best practices and sharing that information with an audience.

“I very much frame everything we do through that lens,” she explains. “I think having a background outside of education in that way has been really helpful. I look at everything like a Rubik’s Cube—how can we turn all of these pieces and make them fit together versus this is the prescribed way of doing things. People will often ask us, ‘What pedagogy do you follow? Are you Montessori? Are you a forest school?’ And we’re all of them. And none of them. I think having a strong understanding of a variety of disciplines and then being able to pull from them to meet each child’s needs is really important.”

In keeping with her flexible approach, Roots Academy teachers use a variety of resources. The reading program is phonics‐​based and Montessori in nature. The math curriculum has changed over the years because they started with one program but found it didn’t work as well for their learners. “Being agile has been really important,” says Jackie. “I think sometimes in bigger institutions there’s such an investment in curriculum and materials that you continue to do something even when it isn’t right sized or the right fit.” There is also an interdisciplinary approach throughout the day, so science, history, reading, writing, and math may be intertwined in various activities.

The daily schedule includes “brain breaks” and dedicated outdoor time. “We have about an acre of outdoor space,” Jackie says. “We’ve spent a lot of time and energy over the last nine to ten months turning our outdoor space into a natural playground. A lot of the work we’ve done is reclaiming the landscape there and it’s turned into a pretty special place with a lot of native plantings and open‐​ended play structures that really lend themselves to the type of education we’re providing.”

“All of our grade levels spend time out in the community on land trust preserve land. Our oldest students spend a full day each week, so they’re out in the field the entire day on Fridays. And our youngest students spend 1/2 day on Thursday out in the field,” explains Jackie. “The goal is really to lay a foundation of understanding in the classroom setting or on our campus. And then when we go out into the field, integrating it and really making that learning sticky so that it becomes a part of them versus something they’re memorizing.”

Roots Academy has four full‐​time staff members and three part‐​time staff members. In addition to each classroom’s teacher, there’s a full‐​time environmental educator who works with all students to make sure the curriculum is integrated in the classroom and when they go out to the field. They’ve also partnered with a small business to offer music education, so the students in each classroom have an hour of music instruction each week. The oldest students can also take private or semi‐​private instrument lessons during the school day.

Jackie encourages parents to trust their instincts if they think their child’s current educational option isn’t working. “As a parent, I knew it wasn’t a right fit before I admitted it to myself. COVID forced me to take a pause and reevaluate things. But I think we have so much information at our fingertips that we often don’t trust our own instincts,” she says. “It is like a big scary leap and what I’ve heard from most people is that it’s the best choice they’ve ever made—because it impacts their home life, too. Everything feels better when the place where your kid spends 40 hours a week is a better fit. School doesn’t have to be something to be endured. My kids are very upset when we have school breaks because they want to be at school, and that’s not something I see from our neighbors who are in the public school system.”

Chris Edwards and Krit Chanwong

The US Agency for International Development (USAID) has announced it will restart sending food aid to Ethiopia. USAID had halted aid earlier this year after “uncovering a colossal scheme by government officials to steal donated grain.” US officials say it could be the largest theft of foreign food aid ever.

Last month, Cato published a study arguing for cuts to foreign food aid, which costs US taxpayers more than $2 billion a year. The study discussed the problems of food aid in conflict zones:

Armed conflicts around the world create demand for humanitarian aid. However, some experts argue that food aid can fuel or sustain conflicts, and thus can do more harm than good in some situations. Food aid can reduce political pressure for warring factions to reach settlements, and it can be seized by combatants and resold to buy weapons or other assets to prolong conflicts.

The USAID debacle in Ethiopia illustrates the dynamic. Ethiopia is experiencing a humanitarian crisis as a result of civil war and drought. Foreign food aid seems justified, but food aid to Ethiopia has been severely mismanaged. One investigation found that more than 7,000 metric tons of wheat and 215,000 litres of food oil have been looted by the various warring factions. In addition to theft, bureaucracy and violence have blocked aid from reaching people in need.

Feeding undernourished people abroad is a noble goal, but practical realities undermine government efforts to do so. The Ethiopian scandal has “cast an unflattering spotlight on the lax controls over the distribution of food and other international aid in crisis zones … including Somalia, Sudan, and South Sudan.”

The failure of food aid in Ethiopia led UN official David Del Conte to conclude, “The denial of relief assistance, and the manipulation of relief assistance, is very much entrenched in the Ethiopian experience.” In that country, “humanitarian assistance is part and parcel of the war machine,” he said. It is used by the various factions as a political weapon against opponents.

This has long been the case. The Central Intelligence Agency opined about Ethiopia’s dictator back in 1985: “He relies on international donors to support the rural population in government‐​controlled areas of the north but vehemently opposes all efforts to provide aid to the drought victims in regions held by the insurgents.”

The problem with aid delivery isn’t just that food is stolen. In 2021, a UN food aid convoy ventured into Ethiopia’s war‐​torn Tigray region with 445 trucks. Only 38 returned, as one of the warring parties apparently seized 407 of the vehicles.

With the resumption of US food aid to Ethiopia, we will see whether it works any better this time around. That seems unlikely, however, as food aid failures and corruption are a feature of Ethiopia’s sad history going back decades.

Nicholas Anthony

There is no question that governments and international organizations are pushing central bank digital currencies, or CBDCs. One need only take a cursory glance at the Human Rights Foundation’s (HRF’s) CBDC Tracker to see these developments. Yet, if still unconvinced, one could also look to the speech International Monetary Fund managing director Kristalina Georgieva gave the day after the HRF CBDC Tracker was launched to see where she said, “If anything… we need to pick up speed [with CBDC development].”

Perhaps the most striking feature of the speech is where it calls for “courage and determination” from those pushing CBDCs forward and warns that now “is not the time to turn back.” In doing so, the speech almost sounds more like a political rally than the typical central banker’s address:

I come in the footsteps of my predecessor, Christine Lagarde, who five years ago gave a speech here encouraging policymakers to follow the “winds of change,” and embark on a digital money voyage by exploring the use of central bank digital currencies, or CBDCs, and fintech.

Five years on, I’m here to provide an update on that voyage. … First, countries did set sail. Many are investigating CBDCs.… Second, we have not yet reached land. There is so much more space for innovation and so much uncertainty over use‐​cases. Third, this is not the time to turn back. The public sector should keep preparing to deploy CBDCs and related payment platforms in the future. …

We’ve left port and are now on the high seas. This calls for courage and determination. We can learn from you: entrepreneurs, business leaders, and investors. You are sailors in the world of fintech. Every day you brave the open waters. Waves and winds are your inspiration.

If anything, we need to raise another sail to pick up speed.

As Georgieva later noted, “Adoption of CBDCs is nowhere close.” According to the HRF CBDC Tracker, approximately 62 percent of the world’s governments are actively researching, building, or deploying CBDCs. As it currently stands, nine countries and the eight islands making up the Eastern Caribbean Currency Union have launched CBDCs. Across these jurisdictions, governments have struggled to increase consumer adoption.

It’s also worth noting that despite efforts by both the Federal Reserve and the European Central Bank to say a CBDC would not replace cash, Georgieva openly said, “CBDCs can replace cash which is costly to distribute in island economies.”

Yet, while Georgieva was correct to note that adoption is low and CBDCs could replace cash, other claims in the speech are questionable. For instance, Georgieva argued that CBDCs “can improve financial inclusion where few hold bank accounts.” However, Norbert Michel, Kevin Dowd, and I have all explained on many occasions that this claim simply does not hold up to scrutiny when one looks at why people do not have bank accounts.

The speech also advised government officials that, “Country authorities wishing to introduce CBDCs may need to think a little more like entrepreneurs.” Yet governments should not be inventing products and steering innovation to see what sticks like their entrepreneurial counterparts. Doing so not only distorts the market but also risks locking people into an inferior product or service.

When the market can’t deliver, products fail. When governments can’t deliver, products are forced upon people. So, to the extent governments intervene, it should be because there is a clear and substantial market failure that only the government is able to address.

The lack of a fundamental justification for governments to issue CBDCs can be seen elsewhere in the speech as well. Georgieva said, “In some countries the case seems dim today, but even they should remain open to potentially deploy CBDCs tomorrow.” Perhaps referring to the numerous government officials from around the world who have said CBDCs do not offer any benefits, she explained that CBDCs should be pursued because they might become useful if conditions change in the future—an argument reminiscent of what former Federal Reserve vice chair for supervision Lael Brainard told Congress.

In other words, there are no market failures to justify the intervention and there are no unique benefits to generate adoption, but that might change in the future.

Georgieva concluded her speech by saying, “We will be in the high seas for some time. But the potential payoff is clear—a more inclusive international financial system that meets our future needs.” That payoff is far from clear. What is clear, however, is that CBDC proponents have failed to make their case and that people are beginning to recognize the risks of CBDCs.

So let me conclude by simply saying that central bank digital currency is one idea that is probably best left out at sea. Rather than let themselves be weighed down by a bad idea, policymakers shouldn’t be afraid to swim away.

Alex Nowrasteh

The flow of illegal immigrants across the southern border has markedly increased over the last several years. In FY2021, Border Patrol had 1,659,206 encounters with illegal immigrants and other border crossers along the southwest land border, which grew to 2,206,436 in FY2022, and 2,045,838 in FY2023. From a low of less than 20,000 in April 2020, due in large part to the pandemic‐​induced collapse in employment, encounters have risen steadily and began to rise even faster after President Biden took office.

Many are blaming President Biden’s immigration policies for the rapid increase in border crosser. My colleague David Bier runs through many of Biden’s policy changes in immigration over the last several years in The New York Times. As Bier mentions in that piece and I wrote over a year ago, most of the increase in illegal immigration can be blamed on the strength of the labor market rather than the administration’s tinkering with border enforcement policies.

There were more than 9.5 million non‐​farm job openings in September 2023, below the average of about 10.4 million per month during the Biden administration. The number of non‐​farm job openings in September 2023 is higher than at any point during the Trump, Obama, or Bush administrations. The wage gain for immigrants in the United States is already between about a four‐​fold and a ten‐​fold increase compared to labor in mostly Latin American and Caribbean countries, even accounting for the higher cost of living in the United States. Since legal migration is very restricted, many come illegally to work.

There simply are not enough temporary work visas available in enough sectors of the US economy for legal migrant workers to meet the demand, so illegal migrant workers meet it. That already high wage premium and extraordinary labor demand likely explain why the number of Border Patrol encounters and job openings track closely.

Implicit in the following figures is the assumption that the number of encounters is a good proxy measure for the flow of illegal immigrants into the United States. Encounters are, of course, an imperfect measure. The same illegal immigrant could be encountered several times, returned, and then come again before finally evading Border Patrol and being released into the United States. “Gotaways,” border crossers who evade Border Patrol, are not counted as encounters and are only estimated and not included below. Encounters also doesn’t include visa overstays. Still, it’s reasonable to assume that encounters are a decent proxy measure for changes in the flow of illegal immigrants.

Figure 1 shows the relationship between monthly job openings and monthly SW Border Patrol encounters. There’s a strong relationship between the number of job openings and encounters, especially during the Trump and Biden administrations. Obama is in the bottom left, with mostly fewer job openings and few border encounters. Bush also has few job openings, but many more encounters. Biden is on the right with many more job openings and many more encounters. Trump is in between with more job openings than Bush or Obama, but with monthly encounters similar to Obama and trending up with the number of job openings that bleeds into Biden’s era of record job openings and border encounters.

Figure 2 focuses on just the Trump and Biden administrations and it doesn’t look like Biden administration border policies boosted illegal immigration. The strength of the labor market, at least according to the job openings measure, seems capable of explaining much of the movement in border encounters. Perhaps most surprisingly, the trend of job openings and southwest Border Patrol encounters looks very similar for the Obama and Trump administrations (Figure 3). There’s much overlap between the two, but encounters rise significantly during the Trump administration as—you guessed it—the number of job openings increased.

Real wages are rising and labor force participation rates are up for native‐​born and foreign‐​born workers. But even if wages were stagnant, it would have a comparatively small effect on the supply of immigrant labor because their relative wage gains from immigrating here are already so large.

But the labor market can’t explain all cross‐​border movements. Conditions in sending countries, the cost of travel, and US border enforcement also matter. Figure 4 uses new hires, a different measure of the strength of the labor market. Forget the two Trump data points on the right as those are during the height of the pandemic in May and June of 2020. It does look like the Obama‐​Trump era of immigration enforcement really could have had an effect in decreasing the number of border encounters relative to Biden. Figure 5 shows the monthly change in net employment and southwest Border Patrol encounters excluding months where employment losses or gains exceed one million (pandemic), which makes the Bush and Biden eras of border encounters look starkly different from the Obama and Trump era.

The next measure of the strength of US labor markets is the unemployment rate, which has averaged 4.3 percent during the Biden administration compared to 5 percent during the Trump administration (higher due to the pandemic) and 7.4 percent during the Obama administration. Figure 6 still shows a relationship between encounters and low unemployment, but it is the best case for enforcement having a large impact on encounters. Monthly unemployment rates for the Trump and Biden administrations are both low, with 41 months at less than 4 percent split about evenly between the two administrations. When unemployment was below 4 percent during the Biden administration, the average number of monthly SW Border Patrol encounters was 180,000. During the Trump administration, the same number was 56,000 – 69 percent below Biden.

The macro fact most supportive of the theory that Biden’s border actions increased SW Border Patrol encounters is that the numbers increased substantially within a few months of him taking office, from 75,000 in January 2021 to 169,000 in March 2021, or 125 percent. But then the proponents of that theory must also explain why SW Border Patrol encounters increased by 365 percent in the last ten months of the Trump administration. Was that also due to changes he made in border enforcement policies? Possibly because Title 42 changed the incentives, but that would change another one of their arguments entirely because immigration enforcers thought Title 42 aided in enforcement.

The last measure of demand in the labor market in this post is the vacancy‐​unemployment ratio (V‑U ratio). The higher the V‑U ratio, the more job vacancies there are relative to the unemployment rate. Vacancy rates are similar to job openings (+0.99 correlation coefficient), but I still use the vacancy rate data here. This is another way to present the same insight as the Beveridge Curve.

The V‑U ratio during the Biden administration has averaged 6.3 percent, while it averaged 4.1 percent during the Trump administration. Plotted against SW Border Patrol encounters, the Biden administration really is an outlier with an exceptionally high V‑U ratio that is attracting many more illegal immigrants and other border crossers (Figure 7).

The surprising conclusion from the above figures is that the enforcement policies of the Bush and Biden administrations look like they had a similar effect on southwest Border Patrol flows, relative to the labor market. Also, the Obama and Trump eras look about the same, controlling for the labor market. The unsurprising conclusion is that the strength or weakness of the US labor market can explain much, and I’d wager most, of the flow of illegal immigrants across the SW border.

The economic gains from working in the United States mostly explain why immigrants want to come here in the first place and the dearth of visas is why so many come illegally. However, the state of the US economy and labor market should be the first explanation that people consider when explaining changes in the flow of illegal immigrants. Policy matters, but the economy matters more.

Clark Packard and Alfredo Carrillo Obregon

For nearly seventy‐​five years, the United States was the leading proponent of rules‐​based international trade and investment. While it once leveraged its dominant position in the global economy to create durable institutions and agreements like the General Agreement on Tariffs and Trade (GATT) and its successor the World Trade Organization, the US is now a laggard.

As Clark Packard noted last year, it has now been more than a decade since the United States entered into a new free trade agreement (FTA) with a new partner. Over time, a non‐​existent trade agenda will lead to a stagnating economy and a loss of influence around the world as the rest of the world moves forward with further economic integration.

As Washington consciously retreats from global international economic leadership, China is filling the void, most notably in the Asia‐​Pacific region but also, increasingly, elsewhere.

While the Obama administration showed no real interest in pursuing trade liberalization in its first term, it was able to complete negotiations and push for congressional approval of the Trans‐​Pacific Partnership, a promising pact with eleven allied countries in the Pacific Rim, during the waning days of its second term.

Subsequently renamed the Comprehensive and Progressive Trans‐​Pacific Partnership (CPTPP), the framework moved forward without the United States after the Trump administration’s ill‐​advised decision to withdraw from the pact. The agreement was conceived as a tool to promote US economic interests, but also probably more importantly, its geopolitical interests. Indeed, foreign policy benefits drove the agreement. At its core, CPTPP was designed to offset Beijing’s growing influence and economic gravitational pull in the Asia‐​Pacific region by providing an alternative market to China. The agreement contained high‐​quality rules constructed to set standards in a vital and dynamic part of the world. Now in place, Beijing (and others) has applied to join the very agreement conceived as a counterweight to China.

On top of that, the Beijing‐​led Regional Comprehensive Economic Partnership (RCEP), which includes a number of prominent Asian powers, has gone into effect. Likewise, policymakers in Washington have let the Generalized System of Preferences (GSP) lapse.

GSP cuts tariffs on certain products coming to the United States from about 120 developing countries, including a number of Chinese competitors in Asia. After the Trump administration’s tariffs, many companies relocated manufacturing out of China and into GSP‐​beneficiary countries to take advantage of the tariff disparity. Now that GSP has lapsed and tariffs have been re‐​imposed on products from GSP countries, some of those very countries have moved production back to China.

In other words, myopic thinking from Washington has effectively ceded the economic playing field in Asia to China.

It’s not just Asia where an atrophying trade agenda is causing a loss of influence and prestige as Beijing fills the vacuum. As The Wall Street Journal detailed last week, Uruguay, a relatively affluent and stable democracy in Latin America, has become more friendly toward China—and drifted away from the United States.

For years, Uruguay “tried and failed to get a free‐​trade deal with the US,” and has now begun FTA negotiations with Beijing and has welcomed a lot of foreign direct investment from China. Uruguay has also applied for membership in CPTPP.

Other countries in South America are intent on reaping the benefits of closer economic ties with China. Last January, Brazilian President Luiz Inácio Lula da Silva voiced his support for a prospective trade agreement between China and Mercosur, the trade bloc that also includes Uruguay, Argentina, and Paraguay. While talks for such an agreement have not started yet (and for a variety of reasons, including a lack of progress in implementing the bloc’s deal with the European Union, Paraguay’s non‐​existent diplomatic relations with China and continued recognition of Taiwan, and the region’s ongoing de‐​industrialization, may not materialize in the foreseeable future) the motivation for Brazil and other South American countries to enter into agreements with Beijing is clear: the region’s total trade with China has grown faster than trade with the United States in recent years. Moreover, China has already negotiated agreements with Chile, Peru, and most recently Ecuador.

Meanwhile, two successive US administrations have let the trade agenda dither, which is coming back to haunt the US. Indeed, current United States Trade Representative Amb. Katherine Tai has said that FTAs are a “very 20th century tool,” which is a stunning admission from the head of the agency tasked with tearing down trade barriers around the world.

Such a proclamation is also news to the rest of the world, including China and longstanding allies, which continue to move forward with economic integration. A cursory glance of the WTO’s regional FTA database shows the massive proliferation of FTAs in the 21st century, even if the US isn’t pursuing them.

To be clear, all is not well with China’s economy and its economic practices. As Packard documented in a recent essay for Cato’s new Defending Globalization project, China faces a number of short‐ and longer‐​term headwinds that will almost certainly constrain future growth. As Adam Posen recently argued in an excellent Foreign Affairs essay, China’s economy is being weighed down by autocratic policies emanating from Xi Jinping and the top of the Communist Party. Though two‐​way trade with China hit a record last year owing in part to inflation, new data show that on net, foreign investment in China turned negative during the third quarter of 2023 – the first such negative quarter since China began publishing data in 1998. As Axios surmised, “These capital outflows reflect collapsing corporate confidence in China’s state‐​led economic model under the leadership of President Xi Jinping.”

Yet instead of capitalizing on China’s weakening prospects with forward‐​looking trade and investment policies, Washington continues to fall prey to misguided protectionism that will weaken the US both economically and geopolitically vis‐​à‐​vis Beijing. If the United States is going to outcompete China in the 21st century, it needs to quickly emerge from its defensive crouch and pursue an affirmative trade agenda that offers countries a solid alternative.

Jason Sorens and William Ruger

The new edition of Freedom in the 50 States: An Index of Personal and Economic Freedom is out. This edition is the most up‐​to‐​date yet, with data good up to the start of this year. It remains the most comprehensive measure of governmental respect for freedom at the state level, with more than 230 policy variables feeding into the scores.

This edition has some exciting new features. With state‐​level housing reforms becoming popular, we have added some of these to the index. Some are good for freedom, like legalizing accessory dwelling units, and others are bad for freedom, like letting towns adopt mandatory “inclusionary zoning” standards (price controls based on income).

With the Supreme Court’s recent Dobbs decision, abortion is also a hot topic at the state level. While abortion is not part of the standard index, we offer alternative indices based on pro‐​life, moderate pro‐​choice, and strong pro‐​choice assumptions. We have included a wide range of new states restricting abortion in the wake of the Dobbs decision. In future editions, we will look carefully at the effect these laws actually have on abortion so we can re‐​weight them if necessary.

We’ve also added a bunch of new variables in areas like occupational licensing, where other organizations have been increasingly producing research.

This year, we continue to find that states at the top and bottom are moving apart (Figure 1).

New Hampshire just printed the highest freedom score yet seen this century, while New York languishes at the bottom, and Oregon, California, and Hawaii have worsened a lot since 2018.

We also had the opportunity to test the effects of freedom on growth and migration for the past decade and the one before. We continue to find that economic freedom increases subsequent real income growth, while both economic and personal freedoms attract residents. Since these findings have been consistent since we first did this study in 2009, it’s fair to say that we can be confident in a true causal relationship between freedom on the one hand and growth and migration on the other.

Figure 2 plots the inflation‐​adjusted rate of growth in personal income against the previous year’s value of economic freedom, by state and year, along with lines of best fit calculated for each Census region. Some regions grow faster than others (the West more, and the Midwest less), but within every region, economic freedom is positively correlated with subsequent growth.

Figure 2: How Economic Freedom Affects Growth, by Region

Looking at change over time is also interesting. Over the 22‐​year period for which we have data, the most improved state is New Mexico. This was a bit surprising, but it makes sense when you consider how badly New Mexico was doing in 2000 (48th). They had plenty of room to improve.

Florida, Arizona, and Wisconsin occupy the next three slots, and none of these are surprising. Florida and Wisconsin started growing by leaps and bounds after 2010, and we have to think that the correlation with the administrations of governors Rick Scott and Scott Walker is not a coincidence. Arizona’s growth period dates to the late 2000s. Gov. Doug Ducey was certainly a leader on regulatory policy. But Arizona has also improved school choice quite a bit, and the ballot initiative has helped liberalize their criminal justice policies and land‐​use freedom (as well as taking away labor market and tobacco freedoms).

This new edition is fun to play with and explore. Check it out, and let us know what you think!

Chris Edwards and Krit Chanwong

Government infrastructure projects often go far over budget. Around the world, the costs of transit systems, energy developments, and other projects frequently soar above what was promised. One cause is the low‐​balling of initial cost projections to help secure public support.

A massive Australian energy project is an exemplar of runaway costs. The budget of the Snowy 2.0 power dam and energy storage project has exploded from $2 billion in 2017 to $12 billion today. The project is a reminder that taxpayers should be skeptical when governments propose large and complex construction schemes.

In the 1970s, Australia completed a system of 16 dams, seven power stations, and miles of tunnels called the Snowy Scheme. The project produces electricity and provides water for irrigated farming. It took 25 years to complete and cost $820 million, or about $8 billion in today’s Australian dollars.

In 2017, the Australian government announced Snowy 2.0, which will add tunnels, generation capacity, and large‐​scale power storage to the Snowy Scheme. Once completed, Snowy 2.0 is supposed to “provide an additional 2,200 megawatts of dispatchable, on‐​demand generating capacity and approximately 350,000 megawatt hours of large‐​scale storage to the National Electricity Market.”

The energy storage plan is to pump water uphill in periods of excess supply and then use the water to generate power when other supply sources—such as solar and wind—ebb. The project was “sold as a nation‐​building project for a low‐​carbon future.”

When Snowy 2.0 was announced in 2017, the government claimed it would cost $2 billion and be open in 2024. Government‐​owned Snowy Hydro pushed for approval saying it had completed “two years of rigorous due diligence.” But some experts warned at the time that the cost estimates were low‐​balled.

Over the years, the project has suffered major technical difficulties and delays. One of the project’s large tunneling machines advanced much slower than planned, created a giant sinkhole, and got stuck in soft ground for months.

Snowy Hydro announced in August 2023 that 2.0 would now cost $12 billion and be completed no earlier than 2028. If we add the costs needed to connect 2.0’s generation to the grid, the total cost could be $20 billion. An Australian dollar is about 65 cents of a US dollar.

Government dam projects are particularly prone to cost overruns. A 2014 study of 245 large dam projects found, “Large dams built in every region of the world suffer systematic cost overruns,” and the final costs of the sample projects “were on average 96% higher than estimated costs.” Snowy 2.0’s cost overrun of at least 500 percent is an extreme case but fits a common pattern.

Experts have questioned other aspects of Snowy 2.0 in addition to the soaring costs. Pumping water uphill for storage requires electric power from other sources, which in Australia includes large amounts of coal‐​fueled power. In the near term, Snowy 2.0 may increase the demand for coal‐​fueled power. Also, Snowy 2.0 will account for just a tiny fraction of Australia’s energy storage needs if the country were to fully transition to renewables. Furthermore, building vast infrastructure in a forest and re‐​plumbing river systems is not green. Finally, Australian regulators have sounded the alarm over Snowy’s monopoly power and rising electricity prices.

This critique of Snowy 2.0 focuses on the problems of large‐​scale energy projects. American policymakers would do well to heed the conclusion: “Given the pace of change, it would seem sensible to make the most of cheaper solutions which can be built quickly and don’t lock us in or out to technologies for the long term.”

Eric Gomez and Benjamin Giltner

This is the third of a three‐​part series examining US arms sales to Taiwan. The first article outlined our methodology for determining the weapons systems within the backlog and showed how traditional capabilities made up a majority of the backlog based on dollar value. The second article examined US maintenance sales to Taiwan and showed how traditional capabilities are more expensive to sustain than asymmetric capabilities.

In this article, we compare arms and maintenance sales made under the Trump and Biden administrations to show how US military support for Taiwan has changed over time.

The data used in this article came from the Defense Security Cooperation Agency’s (DSCA) notices of major arms sales. Because this article compares all sales from the Trump and Biden administrations, it does not distinguish between arms sales that have been delivered to Taiwan and those that are backlogged. For that reason, there is a small difference between the dollar amounts mentioned in the figures below and the dollar amounts for the arms sales backlog. The data were last updated on November 1, 2023.

As shown in Figure 1, the Trump administration announced more sales of weapons and maintenance to Taiwan across all four categories.

The two administrations came closest to one another on sales of maintenance items, with Trump announcing $1.9 billion and Biden announcing $1.6 billion. The Trump administration heavily favored sales of traditional weapons, selling a total of $10.4 billion in traditional capabilities. This was $6.5 billion more than the asymmetric capabilities the administration sold. The gulf between the two administrations in terms of overall arms and maintenance sales is also significant. Trump announced a total of $18.3 billion to Biden’s $4.4 billion.

Figure 1 also clearly shows that the Trump administration is primarily responsible for the current arms sale backlog to Taiwan. Based on data from the Stockholm International Peace Research Institute, nearly every US arms sale announced before the Trump administration took office is now in Taiwan’s hands. The Trump administration essentially ran up a huge arms sale tab with Taiwan. However, due to weapon production timelines, the responsibility of delivering the arms and clearing the tab falls on the Biden administration.

Figure 2 compares the arms and maintenance sales of the two administrations by both the number of sales and dollar value.

While the Biden administration has lagged behind the Trump administration in almost every respect, it has doubled the number of maintenance sales despite a slightly lower dollar value of maintenance sales. This suggests a shift in priorities for arms sales to Taiwan under Biden. Now, the focus is on sustaining what Taiwan already has instead of announcing big‐​ticket items that would further inflate the backlog. Biden still has time in his current term to announce more arms sales. If current trends hold, these future sales will likely come with a relatively small price tag and be focused on either maintenance or munitions.

Many of the most expensive platforms that Trump announced will begin arriving in Taiwan in the next two or three years. This will give the next administration an opportunity to set the tone for future sales as the backlog begins to diminish. Regardless of who wins the 2024 election, it will be essential for the United States to expand Taiwan’s stock of asymmetric capabilities to deter a Chinese invasion.

Taiwan Arms Sales Backlog Excel File