Stock

Vanessa Brown Calder

In a recent Senate Antitrust Subcommittee hearing on Competition and Consumer Rights in the Housing Market, participants argued that institutional investors negatively affect housing affordability. One legislator and witness claimed that investors “represent a sizable portion of [housing] sales” owning “a significant share of single‐​family homes” and the result is declining affordability.

The concern is that institutional investors buy up the housing stock, outbidding non‐​investors who have access to fewer resources. However, this concern is misplaced.

The US housing market is one of the largest markets in the world, so, unsurprisingly, investors have some presence in it. But investor purchases occupy a small share of the market. The National Rental Home Council (NRHC) estimates that large investors made 0.74 percent of single‐​family home purchases in 2021, so someone other than a large investor purchased 99.26 percent of single‐​family homes. Recent Brookings Institution research estimates that large institutional investors own around 3 percent of the single‐​family rental stock.

Moreover, despite increased media attention, investors are not a new, post‐​pandemic phenomenon. Vice President Laurie Goodman at the Urban Institute describes how investors sprung up after the 2008 financial crisis and put a floor under the distressed housing market. From this perspective, they filled a void and served a valuable purpose in the rocky days and years following the crisis.

As Goodman notes in subsequent work, large institutional investors typically buy homes in need of repair, and for various reasons investors can make these repairs more efficiently than owner‐​occupiers. Investors compete with other professional house flippers to provide this service and upgrade the housing stock.

In addition to upgrading the housing stock, research indicates that investor participation produces other benefits. A recent paper on The Impact of Institutional Investors on Homeownership and Neighborhood Access finds that investors “reduced supply of owner‐​occupancy homes” but also “increased the supply of homes available for renter occupancy by 69%,” and this “allowed the financially constrained to move into neighborhoods that previously had few rental units.”

In other words, investors bought housing units from the owner‐​occupied market and rented them out, which increased opportunity for renters who could otherwise not afford to live in predominantly owner‐​occupied neighborhoods. At a minimum, the effects of investors on the market are varied.

Perhaps most importantly, the cited negative effects of institutional investors in the current environment are a symptom of the broader issue of inelastic supply. In a world with abundant housing, regular folks would not need to go head‐​to‐​head with investors in bidding wars because there would be plenty of housing to go around. In fact, reporting indicates that investors focus purchases on markets with strong job growth and limited housing supply. Therefore, the solution is to radically overhaul the local regulatory landscape in which housing purchases exist.

Institutional investors may be convenient boogeymen, but the reality is that they serve a market purpose. Moreover, housing problems run much deeper than critics care to admit. Even if—through some unlikely and ill‐​advised action—policymakers were able to eliminate institutional investors’ market participation, housing markets across the country would still be subject to a plethora of federal, state, and local policies that produce high‐​cost housing. Owners and renters would still struggle to cope, in some cases more than before. This would be especially unfortunate for renters looking for homes in neighborhoods that otherwise do not provide rental options and owner‐​occupiers that can no longer sell to the highest bidder.

Travis Fisher and Gabriella Beaumont-Smith

The long‐​awaited text of Senator Bill Cassidy’s (R‑LA) legislation to impose a tax on imports based on “pollution intensity” was released on November 3. Fisher’s previous piece highlighted how Senator Cassidy’s concept of a “foreign pollution fee” is 1) a carbon tax on imports, 2) will hurt American consumers, and 3) lays the groundwork for a domestic carbon tax. Unfortunately, those facts remain upon inspection of the bill.

Senator Lindsey Graham (R‑SC) is a sponsor of the bill but Senator Roger Wicker (R‑MS), the other original co‐​sponsor of the legislation, withdrew his endorsement.

We’ve read the 92 pages of the Foreign Pollution Fee Act of 2023 (hereinafter referred to as the Cassidy Carbon Tax) so our audience doesn’t have to. There are several areas of grave concern, much of which relate to provisions in the bill that were not apparent in Senator Cassidy’s Foreign Affairs article, which explained the concept in broad strokes.

Specifically, in addition to the three concerns listed above, the Cassidy Carbon Tax:

Inappropriately delegates powers to the executive branch.
Improperly tasks the National Laboratories with establishing trade policy and the implied level of a carbon tax.
Incorrectly defines “pollution” exclusively as “greenhouse gas emissions.”
Creates an arbitrary list of 16 “covered products.”
Invites less carbon‐​intensive countries to impose a carbon tariff on the United States.

The Cassidy Carbon Tax Inappropriately Delegates Powers to the Executive Branch

It appears the Cassidy Carbon Tax identifies the Department of the Treasury as the lead agency in implementing the tax scheme (though it is unclear from the draft legislation). Giving additional authority to the Treasury at this time would be problematic because it would further empower an executive branch that is carrying out a “net zero” mission it was never assigned by Congress.

The Treasury Secretary has fully embraced the concept of “net zero,” even though a net zero policy has never been enacted by Congress. Take, for example, a recent speech given by Treasury Secretary Janet Yellen, which states,

“The net‐​zero transition can bring about a world in which our well‐​being and the well‐​being of future generations is less threatened by heatwaves and storms. In which our livelihoods, and the livelihoods of the most vulnerable among us, are more secure. In which our communities and our economies can prosper. Without accelerating our progress toward a clean energy future, we will see increased physical devastation and dire economic impacts. The need for action is urgent….”

Rather than empowering the present administration’s overreach, Senators Cassidy and Graham should consider sponsoring legislation that would put the concept of a forced transition to a “net zero” future to a floor vote.

The Cassidy Carbon Tax applies to certain imported goods and is imposed by multiplying the amount of the goods imported by “the variable charge.” This charge is defined on p.7 as “an ad valorem fee which is specific to a covered product” and determined by tiers of pollution intensity.

The Constitutional authority to regulate international commerce, including the imposition of tariffs and other taxes, lies with Congress. Unfortunately, Congress slowly delegated swaths of its trade‐​related powers to the president through several laws. The Cassidy Carbon Tax is set up by amending the Internal Revenue Code and grants the Treasury Secretary broad authority over the tax. Granting the Treasury Secretary authority over a tax on international commerce further weakens Congress’s authority to regulate trade.

The bill also amends the Internal Revenue Code by adding to the “Environmental Taxes” chapter, which falls under the “Miscellaneous Excise Taxes” subtitle of Title 26 (the Internal Revenue Code). While the foreign pollution fee could be considered an excise tax (a tax on specific goods and services), the tax only applies to imports. A tax on imports is a tariff and generally, taxes on imports are not imposed through Title 26. Choosing to call this fee by a different name raises questions, particularly since Senator Cassidy titled his Foreign Affairs article, “A Tariff for the Climate.”

As noted in the previous piece on Senator Cassidy’s Foreign Affairs article, he led a resolution against a domestic carbon tax and the bill includes the following provision (on page 4):

“Nothing in this Act, or any amendments made by this Act, shall be construed to authorize the creation of any carbon tax, fee, pricing, or other mechanism that imposes additional costs to any covered product (as defined in section 4695(a) of the Internal Revenue Code of 1986, as added by this Act) which is produced domestically and sold, used, further refined, or distributed within United States or exported to another country for sale or use.”

The Internal Revenue Code applies to “the domestic portion of federal statutory tax law.”

Although Senator Cassidy insists this foreign pollution fee is not a carbon tax, it is exactly a carbon tax on American import‐​consuming businesses and consumers. Moreover, the establishment of any carbon pricing scheme in this part of the Code lays the groundwork for establishing a domestic carbon tax.

The Cassidy Carbon Tax Improperly Tasks the National Laboratories with Establishing Trade Policy and the Implied Level of a Carbon Tax

In addition to giving too much authority over its carbon tax scheme to the executive branch, the Cassidy Carbon Tax creates a carbon pricing board. Specifically, section 4696 of the Cassidy Carbon Tax states, “There is hereby established the National Laboratory Advisory Board on Global Pollution Challenges.” The duties of the board include calculating the baseline pollution intensity of the covered American goods and the respective pollution intensity of the covered foreign goods. The Board would be comprised of federal scientists, officials, and private sector CEOs to advise on the right tax rate.

Creating a carbon pricing board is problematic on its own. However, this board would establish carbon taxes on imported products in an effort to “alter trade flows.…” First, the National Labs are not equipped to do this work—they are at their best when performing basic research and development in a laboratory setting.

Second, National Lab employees are unelected bureaucrats accountable (at best) to Department of Energy (DOE) Secretary Granholm, someone Senators Cassidy and Graham both voted against confirming for Secretary of Energy.

Moreover, the US trade remedies (antidumping and countervailing duty (AD/CVD)) law—and history of US tariff policy more broadly—raises concern that any carbon tax, including the Cassidy Carbon Tax, would not be administered in a sound and impartial manner. US trade remedies law is notorious for strong bias against imports and American consumers because of the broad discretion the law provides the Department of Commerce (another Executive agency). For example, if Commerce deems information provided by a foreign company unreliable or insufficient, the agency can employ methodologies to fill in information that unreasonably favors the US companies lobbying for the trade remedies.

If the DOE followed similar procedures for carbon (or pollution) intensity, equally biased results are sure to emerge. In other words, the US government could easily make foreign businesses look like they emit more GHGs to result in high taxes on foreign products in the name of climate change, but that really serves to protect American businesses from competition.

Additionally, the DOE’s Inspector General recently testified before Senator Cassidy and the Senate Energy and Natural Resources Committee. She said she is “gravely concerned” that the pace of Inflation Reduction Act spending at DOE will result in massive fraud and abuse.

The same agency—DOE—would be tasked by the Cassidy Carbon Tax to set up a carbon tariff scheme through its National Laboratories and the proposed National Laboratory Advisory Board on Global Pollution Challenges. This seems like a recipe for climate alarmist technocrats to have free rein over too much political real estate.

The Cassidy Carbon Tax Incorrectly Defines “Pollution” Exclusively as “Greenhouse Gas Emissions”

In his Foreign Affairs article, Senator Cassidy conflates ambient sulfate pollution and emissions of carbon dioxide. The quotation below highlights the seamless shift from discussing sulfate in the air to carbon dioxide emissions. Sulfate air pollution is a subset of small particulate matter, which is a criteria pollutant regulated by the Environmental Protection Agency’s National Ambient Air Quality Standards (NAAQS). In other words, it is a real pollutant.

Carbon dioxide is neither a criteria pollutant under the NAAQS program nor a pollutant in the traditional sense.

“Americans are seeing, and breathing, the results in our shared atmosphere. According to a 2014 study published in the Proceedings of the National Academy of Sciences, up to a quarter of sulfate pollution in the western United States comes from Chinese emissions. As the Bloomberg columnist David Fickling reported in August, China is responsible for one‐​third of global carbon emissions today and the majority of the net increase in global greenhouse gas emissions since 2019.”

The Cassidy Carbon Tax does not mention traditional pollutants, but instead strictly defines “pollution” on page 54 as follows: “The term ‘pollution’ means greenhouse gas emissions.” Hence, by definition, Senator Cassidy’s “foreign pollution fee” is explicitly a tax on greenhouse gas emissions, not traditional pollutants like small particulate matter.

The inappropriate framing of greenhouse gases as pollution misses a broader point about the pollution‐​reducing benefits of free trade and global capitalism. The stated purpose of the bill (on page 4) is to “raise global environmental performance to ensure a healthy environment and secure global public health benefits.” However, erecting high barriers to trade isn’t going to secure global public health benefits.

As a detailed report by the Center for Conservative Climate Solutions points out, economies that engage in free trade are cleaner, healthier, faster‐​growing economies—as they characterize it, “free economies are clean economies.” The Cassidy Carbon Tax takes the wrong approach by attempting to limit trade in the name of improving environmental performance.

The Cassidy Carbon Tax Creates an Arbitrary List of 16 Covered Product Categories

Imposing a carbon tax on a hand‐​picked list of products is an arbitrary exercise. It also is bound to cause significant lobbying regarding products to add, remove, or exempt from tariffs, which will add complexity and political uncertainty to an already complex and uncertain approach.

The list of covered products in the Cassidy Carbon Tax includes aluminum, biofuels, cement, crude oil, glass, hydrogen (along with methanol and ammonia), iron and steel, lithium‐​ion batteries, certain minerals, natural gas, petrochemicals, plastics, pulp and paper, refined petroleum products, solar cells and panels, and wind turbines.

Among the favored products within this list, crude oil is worth singling out because the practice of Enhanced Oil Recovery (EOR) using carbon dioxide receives special treatment. The Cassidy Carbon Tax states (on page 26):

“Any carbon oxide captured from manufacturing processes or from ambient air by the producer of a covered product … shall have the effect of reducing the pollution associated with the production of a covered product if such carbon oxide is … utilized to help access a contributing part, component part, transforming part, or covered product that is extracted from a geologic formation.…”

To be clear, this provision is a gift to the domestic oil industry. The Cassidy Carbon Tax would give oil companies credit for something they are already doing—profitably—and offer them a leg up on the global stage. Again, this is great news for domestic producers of favored products but represents a new tax (paid by consumers) on oil imported from places that do not employ EOR.

The Cassidy Carbon Tax Invites Less Carbon‐​intensive Countries to Impose a Carbon Tariff on the United States

According to the Niskanen Center, “the US falls in the middle of the pack globally in carbon intensity,” meaning half the world could implement a Cassidy Carbon Tax on the United States. The same study finds that the EU, UK, and Japan emit less than the US.

So, will the EU, UK, and Japan hit the US with retaliation?

It seems the bill tries to avoid retaliation by setting up “international partnerships,” which very much resemble climate clubs (preferential treatment in exchange for cooperation on climate‐​change‐​related goals). On pages 78–79, the bill grants the US Trade Representative authority to “seek to include an expansion of an international partnership agreement,” such as “a trade agreement involving international organizations such as the Organisation for Economic Co‐​operation and Development, the Group of Seven (G7), or any similar organization.”

These partnerships set a precedent for climate clubs that will create a fragmented trading world ruled by different ineffective climate commitments and increased costs. The clear protectionism displayed by this proposed legislation is likely to face legal challenges at the World Trade Organization. To avoid such challenges, domestic companies would be required to pay the price for the carbon they emit. Thus again, the Cassidy Carbon Tax would take us one step closer to establishing an explicit domestic carbon tax.

Conclusion

The Cassidy Carbon Tax was bad enough in concept. But now that we have more details about its implementation, it’s even worse than we thought. It would give undue power to the executive branch and to unelected bureaucrats. It mischaracterizes carbon dioxide and other greenhouse gases as pollution. And it sets a dangerous precedent for climate clubs that create a fragmented trading world while ignoring consumer impact, and doing little for the environment.

Colin Grabow

Danish energy firm Ørsted recently announced that it was scrapping plans for two wind projects off the coast of New Jersey. Known as Ocean Wind 1 and 2, Ørsted said the projects were no longer viable due to high inflation, rising interest rates, and supply chain issues. Those issues, the company added, particularly involved a “vessel delay on Ocean Wind 1 that considerably impacted project timing.”

This was a reference to a specialized wind turbine installation vessel (WTIV) currently being constructed in a Texas shipyard—one plagued by a history of delays—whose delivery has been pushed back by at least a year.

As a Reuters headline summed matters up: “Ship Shortage Dealt Death Blow to Ørsted’s NJ Offshore Wind Hopes.”

Left unsaid by Ørsted (or Reuters) is why the needed WTIV wasn’t purchased from a more reliable overseas shipyard or chartered from the existing fleet of such vessels. That reason is the Jones Act, a protectionist 1920 law that restricts domestic waterborne transportation to vessels that are flagged and built in the United States. There are no WTIVs that meet those requirements, which is a significant hurdle for the offshore wind industry.

Companies seeking to utilize these highly specialized vessels in a manner that complies with the Jones Act face three options: 1) operate the WTIV out of a foreign port (thus making the voyage to the US installation site international rather than domestic); 2) station the vessel at the installation site and have turbine components transported to it from a nearby US port via Jones Act‐​compliant “feeder barges” (which brings added risks); and 3) build a WTIV in a US shipyard and register it under the US flag.

Ørsted opted for the third option. More precisely, the company opted to charter a WTIV that is being built for Dominion Energy and was originally slated for delivery by the end of 2023.

But things haven’t quite gone according to plan.

Instead of becoming operational this year, the vessel’s delivery has been pushed back to late 2024 or early 2025. And its price has climbed from $500 million to $625 million.

No one should be surprised. The shipyard constructing the WTIV also experienced cost overruns and significant delays on the last two ships it delivered. A hopper dredge that was originally scheduled to be fully operational by spring 2023 still hasn’t been delivered by the shipyard either.

And there aren’t many alternatives. Other US shipyards that engage in commercial vessel construction such as Philly Shipyard and General Dynamics‐​NASSCO are already booked for years to come (mostly filling government contracts).

Without the Jones Act, the vessel for Ørsted’s project could have been built at a lower cost from a more experienced foreign shipyard. Two years ago a South Korean shipyard agreed to build a WTIV—based on the same design as the Dominion Energy vessel (GustoMSC NG-16000X)—in three years for $330 million. That’s nearly $300 million less than what Dominion is paying (and the South Korean‐​built vessel will have a more powerful crane to boot).

Perhaps more importantly, the vessel would have had a better chance of being finished on time, thus avoiding the delay that contributed to the New Jersey projects’ demise.

Ørsted’s decision to cancel its two projects is a particular black eye for New Jersey coming only months after its legislature passed legislation allowing the company to keep federal tax credits worth hundreds of millions of dollars instead of passing them along to state ratepayers. Indeed, Trenton’s sensitivity over the cancelation was evidenced by Governor Phil Murphy’s statement that labeled Ørsted’s decision “outrageous” and one that ”calls into question the company’s credibility and competence.”

Perhaps instead of trying to promote offshore wind through subsidy schemes, companies and politicians could instead seek to eliminate government‐​imposed obstacles to the industry’s success. Paring back outdated protectionist laws such as the Jones Act would be an excellent place to start.

Jeffrey A. Singer

The New York Times today features an important article by reporter Jan Hoffman describing how what was initially perceived as an opioid‐​related overdose crisis has morphed into a “polydrug” overdose crisis, with many nonmedical drug users combining stimulants with opioids, and often becoming addicted to more than one drug, making overdose reversal and substance use disorder treatment more challenging.

Hoffman reports that the last five years have seen methamphetamine‐​related deaths triple and cocaine‐​related deaths double. She reports that people addicted to opioids are increasingly using other substances as well, including psychostimulants like methamphetamine and cocaine, but also depressants and tranquilizers like Xanax.

This report helps bring attention to a fact I’ve been writing about for years: today’s nonmedical drug users are yesterday’s pain patients who became hooked on prescription opioids and now seek them in the black market. I mentioned in this 2019 blog post that, by 2017, the Centers for Disease Control and Prevention reported that 68 percent of opioid‐​related overdose deaths were “polydrug,” i.e., toxicology reports revealed a mix of drugs in the overdose victims’ system. The New York City Department of Health reported in 2021 that almost half of all opioid‐​related overdose deaths involved cocaine, and 41 percent involved alcohol.

Hoffman’s report brings to mind a 2018 University of Pittsburgh study I frequently cite, showing the overdose death rate has been on a steady exponential growth trend since at least 1979, with different drugs in fashion and predominating among overdose deaths at different times. It also reminds me of a 2017 study by Cicero and colleagues showing, “In 2005, only 8.7% of opioid initiators started with heroin, but this sharply increased to 33.3% (p<0.001) in 2015, with no evidence of stabilization.”

Hoffman writes:

A decade or so ago, Mexican drug lords figured out how to mass produce a synthetic “super meth.” It has provoked what some researchers are calling a second meth epidemic.

Hoffman devotes a significant portion of her piece to the second meth epidemic, providing powerful stories of some of its victims.

I wrote and told members of the House Judiciary Committee’s Subcommittee on Crime and Government Surveillance last March that the iron law of prohibition—“the harder the law enforcement, the harder the drug”—means we can expect more potent and dangerous forms of drugs to continue to arise.

In the case of meth, the Combat Methamphetamine Epidemic Act, which went into effect in 2006, drove the meth trade into the hands of the Mexican drug cartels, who quickly developed more efficient ways to make more potent meth while making patients waste billions of dollars on over‐​the‐​counter oral decongestants that are no better than placebo.

Alas, until policymakers come to terms with the fact that the polydrug overdose crisis and the “second meth epidemic” are the latest manifestations of drug prohibition, the cycle of harder enforcement yielding harder drugs and new drug “epidemics” will continue.

John Mueller

As President Biden and Chinese President Xi Jinping prepare for their meeting next week, some of their briefers may bring up the word “hegemon.”

The condition is generally linked with “domination,” or sometimes “mastery” or “supremacy.” Insofar it has been achieved, it has been regional, and the only country to have done so in recent centuries is said to be the United States, which has been held to have “dominated” its hemisphere.

However, China, it is feared, may be able to achieve that status in its neighborhood if it continues to grow economically and to expand its military. Indeed, a central contention for many prominent academics and officials is that it may well be necessary to use armed force (or to “come onshore”) to keep China from achieving the technical status of hegemon.

In his highly readable and well‐​researched new book We May Dominate the World: Ambition, Anxiety, and the Rise of the American Colossus, Sean Mirski assesses the American experience with hegemony from 1860 to 1945. The book derives the first words in its title from spoutings in 1901 by Brooks Adams, a grandson of John Quincy Adams, and it can be taken to suggest that “domination” is filled with peril, resistance, and disappointment, is something of a fantasy, and is scarcely worth the effort. Prospective hegemons like China might best be advised to avoid the condition.

Pursuing stability

In 1821, Adams’ grandfather famously pointed out that the United States “goes not abroad in search of monsters to destroy.” Yet, a century later, notes Mirski, the country “was battling monsters, real and imagined” throughout the New World in a series of misadventures primarily designed to get and to keep the unruly Latin Americans under control. These included “occupying two entire nations, garrisoning parts of three more, running half a dozen protectorates and customs receiverships, prosecuting several bloody counterinsurgencies, and deposing regimes with a frequency that bordered on the gratuitous.”

For example, in 1915 a mission was sent to Haiti after what Mirski calls its “tinpot dictator” was killed by an angry mob. This led to a costly and chaotic occupation that lasted until 1934, after which the country devolved back to what seems to more or less what had existed before. Occupying American soldiers were mainly despised (except by artful local opportunists seeking to manipulate the interventions to their own advantage), and the occupiers learned to walk down the middle of streets to be better able to dodge the garbage hurled at them by the undominated locals.

An earlier enterprise in 1903 was more successful. In the 60 years prior, revolutionists in the province of Panama had sought at least 50 times to secede from Colombia. Although the United States had often helped Colombia put these rebellions down, it had become anxious to get a canal built there after a French effort has gone bankrupt, and the U.S. government was frustrated with negotiations with what President Theodore Roosevelt called “the homicidal corruptionists” running Colombia. Accordingly, the United States switched sides. An amazing inept expeditionary force sent by Colombia to counter the effort was readily bribed into submission. Mirski considers the American caper to have been unnecessary and a “blunder.”

Dealing with foreign interlopers

Mirski argues, however, that U.S. interventions did manage to succeed at one hegemonic task: keeping other great or potentially great powers out of the hemisphere. And there may have been some successes at this: most notably in helping to further derail bungled probes by the French before and during the American civil war and by Germany in the runup to America’s entry into World War I.

In addition, agents from Germany, France, Britain, and Russia had their eyes on the strategically important Hawaiian Islands at various times. But alarms were raised in particular when a rising Japan sent a warship and demanded imported Japanese workers there be given the vote at a time when they outnumbered whites and native Hawaiians. This was also when the government was, in Mirski’s words, “rickety,” “wobbly,” and “defenseless.” To hedge against an obvious possibility, the United States annexed the islands in 1898.

Acting mostly out of humanitarian motives, the hegemon also ousted colonial Spain from Cuba in a war in 1898. However, Mirski fails to note that many Spaniards welcomed the war because a defeat would allow them to withdraw honorably from their highly troublesome colony. In the process, the United States also snapped up the Philippines, an act of opportunism that proved to be disastrous for both colonial powers. The United States also seized and held onto the more‐​valued colony of Puerto Rico which, as it happens, now has the highest GDP per capita of any entity south of the Rio Grande (perhaps there is lesson here?)

However, for the most part, foreign powers sought to intervene in Latin America not to undermine American “hegemony” but to collect debts and to protect their nationals residing there. Indeed, the wily Europeans were sometimes able to snooker the alarmed Americans into doing such work for them. Nonetheless, the Americans found (or imagined) any European efforts to be threatening.

Accordingly, the United States became obsessed with Latin American corruption and disorderliness (five changes of government in a year was not uncommon), weaknesses that might allow for the reentry of one European rival or another. However, Mirski finds that “time and again” intervention by the great northern dominator “would miscarry, leading to greater instability,” presumably leaving Latin America even more vulnerable to intervention by the dreaded interloping Europeans.

Actually, despite the chaos so fulsomely exacerbated by the United States, it seems likely that the European rivals never got around to reinserting themselves not because of American “hegemony,” but because they were fully consumed with a couple of other tasks: colonizing Africa and Asia, and misdealing with each other in a manner that led to two massive wars on their continent.

Giving up

Eventually, the United States essentially gave up in frustration on the dominance routine, and it left the Latins free to “work out their own salvation,” as President Woodrow Wilson put it. From time to time, America applied economic and diplomatic pressure and it tried—and mostly failed at—covert regime change. But, with a few exceptions, it substantially abandoned armed intervention and interference.

This led to a wide collection of military dictatorships that often provided at least a degree of stability, and they were mostly tolerated. But then—although not covered in the book—almost the entire area went democratic between 1975 and 1990 and coups all but vanished. The United States certainly encouraged this development, and it may have been quietly instrumental in a few cases.

But efforts by the hegemon were not key. Likely far more important were changes in doctrine in the Catholic church and inspiration derived from Spain and Portugal which went democratic and joined prosperous Europe after their long‐​reigning dictators died. As one reporter put it, “despots have gone out of style.”

The most prominent use of force, of course, was with Cuba where the United States tried and failed to topple the Communist regime. Efforts at subversion also failed, and the Cuban government has been thumbing its nose at the supposedly “dominating” nearby hegemon for 64 years. The United States also applied sanctions (also more lately to Venezuela) with, as usual, no positive policy result.

The chief hegemonic success story (besides, perhaps, keeping foreign weapons that are potentially offensive out of Cuba), was the use of military force that successfully reimposed democracy when it lapsed in tiny Panama in 1989 and even tinier Grenada in 1983. That measure had routinely failed earlier in the century. This time, however, the interventions worked: democracy resumed after the Americans left.

China?

Overall, there’s little in this record to inspire would‐​be “hegemons” elsewhere. Although the United States sometimes got its way in its area, it is absurd to think that, even under ideal “hegemonic” conditions, it “dominated” by any reasonable definition of that extreme word.

And if the United States could not really dominate the insecure countries in its neighborhood during its hegemonic century, it seems unlikely that a hegemonic China could do much better in its area. As Mirsky notes, many of the countries there are far more secure and better equipped than the Latins of yore, particularly Japan, South Korea, India, Vietnam, Indonesia, and Australia. In addition, unlike their Latin American counterparts, they would probably seek to coordinate with each other and with the United States against a China threat—some of that has already happened, in fact. And, like the Latins, they would evade diktats issued by their large and increasingly despised neighbor.

David Kemp and Peter Van Doren

The nuclear power renaissance experienced another setback this week with the cancellation of one of the United States’ leading nuclear projects. NuScale Power, a nuclear start‐​up, announced termination of their Carbon Free Power Project (CFPP), a planned nuclear power plant to be built at Idaho National Labs using NuScale’s small modular reactor (SMR) technology.

Unfortunately, the cancellation affirms our skepticism of the optimism surrounding innovative nuclear technology like SMRs. NuScale’s small reactor design purports to be the answer to nuclear power’s historic downfall, astronomic construction costs.

Most nuclear power plants, in the United States and throughout the world, experience huge cost overruns and large delays during construction. The United States’ two most recent projects, for example, at Vogtle in Georgia and at V.C. Summer in South Carolina, both saw ballooning costs from the outset of construction in 2013. The V.C. Summer project was eventually cancelled in 2017, after more than $9 billion was invested, while one of the two reactors under construction at Vogtle finally began commercial operation this summer, 5 years late and at more than double the planned cost.

By building smaller reactors, a large portion of which could be built in factories, NuScale’s and others’ SMRs hope to avoid the large cost overruns by harnessing standardization and economies of mass production. In a paper last year, we explained our doubts about the economics of SMRs and whether they would prove to be the panacea that many nuclear advocates hope.

As we discussed in a blog earlier this year, the CFPP, which was based on a subscriber model where municipal utilities chose to subscribe to a certain portion of the plants planned electrical capacity and were responsible for a corresponding share of the capital costs, experienced its first major cost increase last spring. NuScale announced that, because of inflation and high interest rates, the estimated electricity cost of the plant increased from 5.8 cents per kWh to 8.9 kWh and the overall projected construction costs, including the costs of financing, increased from $5.3 billion to $9.3 billion. Likely because of the cost increase, NuScale doesn’t have enough subscribers to move forward with construction, originally planned to begin next year.

NuScale and the CFPP look to be another nuclear cautionary tale. Despite optimistic pronouncements about the ability of SMRs to evade nuclear’s traditional high price tag, and at least $300 million already paid in grants and an agreement to cover 23 percent of the CFPP’s costs from the Department of Energy, the CFPP didn’t even reach the most challenging phase of nuclear development and deployment: construction. It is just one more reason to be skeptical that we are on the verge of a nuclear renaissance.

Walter Olson

The secret ballot was won in a hard‐​fought reform campaign late in the Nineteenth Century and has been fundamental to American election practice ever since. It helps safeguard individuals’ right to vote their conscience against the threat of retaliation or intimidation, which had been common practice in some localities when voters’ choice of ballot was publicly visible. It also tends to curb explicit vote‐​buying, a practice still common in some other electoral systems, by interfering with the extent to which a would‐​be bribe provider can check on whether any given recipient followed through on his or her end of the bargain.

Ballot confidentiality can, however, stand in tension with another essential element of elections, transparency, which (among its other values) is a front‐​line defense against election maladministration, fraud, and mistaken claims of fraud. For that reason, some officially held facts about your voting history — such as whether you are registered to vote, which elections you may have voted in or skipped, and in which party’s primaries you participated — are ordinarily a matter of public record, whatever the incidental loss of privacy.

As voting rules and practices have changed in recent decades — driven in part by new technologies, legal mandates, and voter preferences — a number of new practices have implicated privacy, so far mostly in manageable ways. To begin with the most frivolous, the rise of Instagram led to the occasional fad for election‐​booth selfies showing a filled‐​out ballot. Although many states had laws on their books against taking photos in the election booth, hardly anyone cared, in part because of the lack of evidence that any harm resulted. (It might be different had there been reports of people submitting their completed selfie to the local party headquarters in exchange for a frozen turkey or whatever.) Still, this helps explain why election planners still consider it desirable for some stages of the voting process to be “receipt‐​free,” even as “the receipts” has come to stand in popular discussion as the very model of a good argument‐​settler.

Two developments on the current election scene bid to pursue important objectives while also making the system at least slightly less “receipt‐​free.” In the case of one — ballot tracking and notification — the benefits almost certainly outweigh the present risks. To quote my forthcoming paper on election reform for the Nevada Policy Research Institute:

Ballot tracking, much like the tracking of a sent physical package, enables voters to go online and follow the stages of their ballot from receipt through identity authentication to tabulation. Notification is the same process but with the state doing the initiating: authorities collect voters’ preferred contact method (text, email, etc.) on a voluntary basis and then send a notification at each significant stage, as well as notifying them at the start that a blank ballot has been sent to them.

…Experience indicates that these services enhance voter satisfaction. But creating happy customers is only the start, since the services are also an important security measure. Should someone receive a “we have received your vote” notification who has not in fact voted, he or she can respond accordingly and provide the basis for starting an investigation. Voters can also serve as first line monitors of assorted problems such as mail delays, with a pattern of responses sometimes helpful in troubleshooting what may have gone wrong. And, of course, voters can learn quickly about any problem with their ballot such as a missing date or disputed signature – quickly enough to resolve matters before the crunch.

Ballot tracking and notification pose relatively scant danger to voter privacy — perhaps occasionally via a shared email account someone will learn that a spouse has voted, though not how. Most states have now moved to adopt the practices, and that seems a good thing to me.

In the case of the other development involving privacy, the release of cast vote records and ballot images, things do get more complicated. I’ll save that discussion for another post. And I’ve written previously about what I see as the most distinctive current danger to ballot privacy, namely letting political operatives participate in the handling and even sometimes the filling out of mail ballots.

Vanessa Brown Calder

Commercial‐​to‐​residential zoning reforms have become a popular focus of regulatory reform legislation in states, with at least nine introducing legislation in 2023 and a handful passing it. In the last year, commercial‐​to‐​residential conversion, or “adaptive reuse,” reforms have been enacted in Montana, Rhode Island, Oregon, Florida, and Wisconsin, along with a variety of cities.

The goal of these reforms is to make it easier for developers and property owners to adapt vacant properties to more productive uses. Given that many cities have struggled with excess commercial space and unaffordable housing post pandemic, reforms that allow commercial‐​to‐​residential conversion make logical sense.

Enacted state reforms range from straightforward directives requiring local governments to allow residential or mixed‐​use development on commercially zoned properties to legislation that creates financial incentives for jurisdictions that relax regulation to accommodate conversion projects. These reforms are summarized below.

Although current examples of commercial‐​to‐​residential conversion legislation are new enough that evidence on outcomes is unavailable, at least one previous reform indicates that allowing commercial‐​to‐​residential conversions can increase housing supply and help revitalize struggling urban areas.

When the dot‐​com bubble burst in the early 2000s—and need for commercial office space plunged—Los Angeles relaxed zoning for older commercial buildings and successfully converted unused commercial to residential space. Following the passage of Los Angeles’s Adaptive Reuse Ordinance, research finds “downtown Los Angeles experienced a renaissance…that allowed the conversion of older commercial buildings without adding parking, resulting in the direct creation of over 12,000 units of housing over 20 years.”

Los Angeles’s reform is more comprehensive than current reforms, which may explain its positive effect on housing supply. For example, the Los Angeles reform applied to buildings designated on the National Register of Historic Places and buildings with a wide variety of commercial and manufacturing uses. The reform provided certainty around parking requirements, exempted adaptive reuse projects from site plan review requirements, and allowed the zoning administrator to waive public hearing requirements if direct neighbors of the project had no objections.

Despite Los Angeles’s success, policymakers should bear in mind that structural limitations will make many commercial spaces unsuitable for residential conversion: recent work suggests that just fifteen percent of commercial district office buildings are suitable for adaptation. As a result, commercial‐​to‐​residential reforms will likely have small positive impacts, rather than large impacts, on housing supply and should be undertaken along with other reforms.

To maximize results, policymakers should focus on broadly increasing long‐​term development flexibility. Designated conversion properties should not be limited to office space but also include hotels, warehousing, retail, entertainment, restaurants, and other uses. Furthermore, vacant and dated properties occur in more than just downtown areas or transit hubs; therefore, reforms should apply across metropolitan areas rather than in narrowly limited areas.

Like other types of zoning reform, commercial‐​to‐​residential zoning reforms are most likely to be successful when they limit local governments’ tools to block (re-)development. Legislative provisions that limit local governments’ ability to employ parking requirements, height restrictions, lot area requirements, and local review of residential conversion projects to this end increase legislative effectiveness. In this respect, Los Angeles’s reform is a better model than current state reforms.

Big picture, the need for commercial‐​to‐​residential conversions in the face of changing demands begs the question: why do cities separate commercial and residential uses to begin with? In an alternate universe, cities would not be bound by the dated Euclidean zoning framework of the 20th century, which unnecessarily freezes existing development in place and counterproductively segregates land use across space. In a small way, commercial‐​to‐​residential space conversions help open the door to a different reality.

Eric Gomez

Presidents Biden and Xi will have a meeting on the sidelines of the Asia‐​Pacific Economic Cooperation (APEC) summit in San Francisco next week. This marks the first time the two leaders are meeting face‐​to‐​face since the G20 summit in Bali last year.

The two leaders will have a lot on their agenda as they try to stabilize a relationship damaged by meetings between US Speakers of the House and Taiwan’s president, Chinese military maneuvers, US export controls on cutting edge technology, and the Chinese spy balloon incident.

Given the scope of the challenges, it would be wishful thinking to expect this summit to produce any satisfying, durable solutions. This meeting should be viewed, instead, as a small but positive step toward resuming regular and high‐​level diplomatic contact between two great powers that reduces reasons to fight one another. 

Taiwan will be the most important subject of conversation. China pulled out of several official dialogues in retaliation for then‐​Speaker Pelosi’s August 2022 visit to Taipei. Both the US and China have been needling at one another’s red lines in the Taiwan Strait, and both see themselves as the defensive, status quo player. Hopefully the summit will produce, at a bare minimum, a political understanding that allows both sides to turn down the temperature and reduce the needling. Neither side seems eager for a conflict, but the current cycle of actions and counter actions isn’t helping the situation.

Related Articles:

Breaking Down Taiwan’s Arms Backlog, Parts 1 and 2

What the PLA Rocket Force Shakeup Means for Taiwan

How the US and China Can Lower Tensions around Taiwan after Pelosi Trip

Colleen Hroncich

Peter Searby probably didn’t seem like someone who would become a teacher. “I didn’t enjoy school as a boy,” he admits. “I’ve always been a bit on the creative side and somebody who’s a very active learner and wants to get outdoors.” Even as a teacher, he often felt stifled. “I found that most of the time the classrooms were very passive learning and more of an information transfer rather than kind of a true fellowship of creativity and trying to find your gifts,” he adds.

He tried to bring his creativity and love of the outdoors into the classroom. “I started doing adventure trips with boys. Canoe or kayaking trips down the river and we’d camp out on islands,” he recalls. But school leaders said it was too risky and would be an insurance liability. To Peter, it seemed there was more to it than concerns about risk. “I kept trying to force into the system certain experiences that often didn’t fit in the schedule or in the curriculum,” he recalls. “Over the years, I’ve noticed that schools are dominated by the ideas of curriculum and content and testing and just trying to get kids to college. So they sort of neglect some really important experiences you could have as a kid. Not all schools. I know I’m speaking in general here, but at least in my experience that was what happened a lot.”

Around 10 years ago, Peter decided he’d had enough and was going to start his own organization that focuses on the things he loves—and the Riverside Club for Adventure and Imagination was born. While there are some offerings for girls and families, the main programs are for boys. Riverside incorporates creative arts, outdoor education, and building things. It’s rooted in the Catholic faith, but there are participants from many different faith communities.

“Faith, a sense of fellowship along the journey, creative arts, outdoor education—I wanted to start something focused on all of these things. I wasn’t sure what it would be at first, but I started meeting with homeschool families. And I realized they are a lot of unschoolers out there trying to find every means possible to inspire their kids,” says Peter. “I told them what I wanted to do, which was sort of to give an adventurous and imaginative experience to their sons. And they said, ‘Well, that’s what we’re looking for.’ And it’s been lacking in the market. There aren’t many people, as far as I can tell, doing this sort of thing in this way.”

The heart of Riverside is the tutorial. Boys ages 8–13—called apprentices—gather once a week for a variety of creative learning activities guided by tutors. Tutorials are held four days a week this year with around 30 boys attending each day. Peter keeps the number low so each tutor only guides a maximum of 10–12 apprentices.

Peter and the other tutors collaborate at the beginning of each year to create a curriculum based on a theme. The apprentices all work on similar projects but tiered based on age. “This year’s theme is survival, so everything has to do with survival in some way,” explains Peter. “We do live radio shows and film. The boys write stories. We have music—they sing songs and memorize ballads. We do something where they have to write stories for our role‐​playing game, and then they play it. So it’s a really cool way of learning writing, because if your writing isn’t fun, then the story and the game isn’t fun.”

Riverside apprentices also create something called a legend box, which the tutors use to help them understand storytelling and first‐​person writing. Going along with the survival theme, this year’s legend box focus is surviving an alien attack on the world. “The idea is like a time capsule,” Peter says. “So you open up the box and the end goal is that you have a first‐​person journal of this character in another world who’s writing a diary. You have items that he carried on himself, like maps and drawings. So the idea is that you get the inklings of another world through a time capsule that this character kept.” At the end of it, the apprentices have the box and all the items, and they display of all their boxes. Peter says it’s a fun way to teach the kids about storytelling and lets them experience the creativity of building a fictional world.

To get the kids started, the tutors create their own legend boxes as a model with journal entries, drawings, and games. And they make sure the kids see where they (the tutors) could do better. Peter says, “That helps them see that the creative process is messy, and you fail a lot along the way. And they get used to the idea that the expectation is not perfection right away. You have to keep trying, keep messing up.”

Peter recently released a book called Casting Fire: A Guide to the Adventure and Imagination of Boyhood. “After 10 years [of Riverside], I have a very good understanding of what we do and why. So the book is a vision of education for boys and just a way to teach more creatively and adventurously. But it’s not a curriculum,” he says. While he doesn’t want to franchise his ideas, he does want to help others create similar opportunities for boys. He’s planning to write another book to give more concrete advice on how to bring a Riverside‐​type program to other areas.

For anyone looking to start something like Riverside, Peter has some good advice. “I’d say it’s all about finding the person or the leader who has a vision,” he says. “These type of teachers, sometimes they’re in a school, but they don’t quite fit in. They’re always trying to do something super creative. They often have a more personal relationship with their students. There’s a bit more soul craft, I guess you could say, in this sort of education. It’s about inspiring minds and hearts and developing a real fellowship together. So you have to find the right people. I think a lot of people make a mistake that it’s about curriculum. But for me, it’s all about finding that person who has the gift to inspire other people.”