Wednesday afternoon links

1. Chart of the Day I (above). Traffic volume data recently released by the Federal Highway Administration through August indicate that Americans have been driving at record levels lately. For the month of August, total travel on all US roads and streets was estimated to be 277.3 billion miles, which was 2.3% above August 2014, and established a new all-time record high for travel volume during the month of August. The moving 12-month total for traffic volume on all roads and streets was 3.11 trillion miles through August 2015, which also established a new record high (see chart above). Compared to August of last year, the moving 12-month total increased 3.3%, which is the largest annual increase in that measure of traffic volume since 2000. The all-time record highs for traffic volume though August likely reflect both low gas prices and a gradually improving economy.

2. Quotation of the Day I from the article “Tipping is awesome. Trust me, I’m French“:

It really is glorious, your service culture. You have no idea how good it is. It’s like the stories of people from Communist countries who went into a supermarket for the first time and just broke down and cried. To us, it’s just a store, but it’s actually magical. Same thing with American service culture.

Which is why when I see Americans — predominantly, let’s face it, elite, liberal Americans — who want to destroy one of the nicest things about their country, and one of the nicest things in my life, I get positively angry. I am talking, of course, about the movement against tipping, seen here recently in The Economist (The Economist! Not Pravda! The Economist!), and also in Vox (of course).

There’s a grandeur to tipping. There is a beauty to this simple transaction, to rewarding a job well done with a just recompense. There is a beauty to someone who tries to do their job well, and with a smile. It should be rewarded — and without tipping, it won’t be.

Many things in life are drawn in shades of gray. This is not one of them. Tipping culture is one of the great things in the world, and people who disagree should be tarred and feathered. Or, worse, made to wait 30 minutes for their order in a Paris tourist trap.

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3. Chart of the Day II (above). Despite low oil, gasoline, and natural gas prices, America’s Shale Revolution is still alive and well and continues to produce shale resources at record levels. Based on EIA data through August, America produced a new record-setting volume of natural gas (marketed production) during the month of August at 2.52 trillion cubic feet (see chart above). It’s possible that the low energy prices have driven a new round of cost-cutting, technological improvements, and drilling and production efficiencies that have allowed many oil and gas companies to remain profitable despite low prices.

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4. Chart of the Day III (above). In another sign that the Shale Revolution is far from over, the EIA’s Drilling Productivity Report released this week provides new information about a pending and very significant US energy milestone that is about to be established. According to EIA estimates, the Permian Basin oil field in West Texas is on track to surpass the 2 million barrels per day milestone this month (November), which will mark the first US oil field ever to produce at that level of output (see chart above). Daily production in the Permian Basin first surpassed the 1 million barrel milestone in May 2011, and will now reach the 2 million barrel milestone this month. That represents a doubling of Permian Basin’s crude oil output in just 4.5 years, and elevates the West Texas oil field to one of the most prolific oil fields worldwide, one of only a few that have reached the 2 million barrels per day level of output.

5. The Bakken Boom is Not Over Either, based on a few recent new reports: a) Williston jobs still plentiful, becoming more specialized and b) Job activity, construction pace in Williston still brisk.

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6. California is NOT Booming. Business relocation specialist Joe Vranich reports that a minimum of 9,000 businesses left California between 2008-2014, thanks to the state’s hostile business environment.

7. Venn Diagram of the Day (above), inspired by this Washington Post article about how the District of Columbia is implementing surge pricing (as high as $8 an hour) for parking as a way to reduce traffic congestion.

8. The Power of One: One disruptive student can keep an entire class from learning. Just one. The whole year. That’s what we learn from Joe Soucheray’s column “Powerless teachers make it easier for unruly students to rule.”

9. Quotation of the Day II, from Walter E. Williams:

Completely ignored in most discussions of slavery is the fact that slavery was mankind’s standard fare throughout history. Centuries before blacks were enslaved Europeans were enslaved. The word slavery comes from Slavs, referring to the Slavic people, who were early slaves. What distinguishes the West, namely Britain and the U.S., from other nations are the extraordinary measures they took to abolish slavery.

10. UberPool is a Success in NYC, according to one news report (“Even cynical New Yorkers don’t mind sharing Uber rides with strangers“), and is now heading to Chicago.

 

 

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North Korea’s “epic economic fail” in international perspective

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DOWNLOAD THE REPORT

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This report brings to the table new research on the dimensions of economic failure in modern North Korea, offers a quantitative view of how nations develop in our modern world, and where North Korea’s awful slide downward fits within this global tableau; offers admittedly approximate long term estimates of overall net resource transfers to the DPRK, including estimates of net transfers from the major state benefactors; and some indications about the interplay between concessionary resource transfers from abroad and the DPRK’s domestic economic performance. It concludes with some observations about the implications of these findings.

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Debate Debrief: More economics for the GOP in Round IV

Barely two weeks after the Republican primary debate hosted by CNBC in Colorado, Fox Business Network (FBN) welcomed the 2016 GOP candidates to Milwaukee to discuss the economy. Co-hosted by the Wall Street Journal, the evening was split into a 7 p.m. undercard debate and the main event at 9 p.m.

At 7 p.m. Trish Regan and Sandra Smith, both of FBN, & WSJ’s Washington Bureau Chief Gerald Seib led Governor Chris Christie (NJ), former governor Mike Huckabee (AR), Governor Bobby Jindal (LA), and former senator Rick Santorum (PA) in an hour of back-and-forth.

Republican presidential candidates pose during a photo opportunity before the debate held by Fox Business Network for the top 2016 candidates in Milwaukee, Wisconsin, November 10, 2015. REUTERS/Jim Young.

The 9 p.m. event was moderated by FBN anchors Maria Bartiromo and Neil Cavuto and WSJ Editor-in-Chief Gerard Baker. The eight candidates were selected on the basis of  having scored 2.5% or higher on average in four recent national polls. They included: Ben Carson; Donald Trump; Senator Marco Rubio (FL); Senator Ted Cruz (TX); former governor Jeb Bush (FL); Carly Fiorina; Governor John Kasich (OH); and Senator Rand Paul (KY).

Some takeaways from AEI scholars, from the Political Corner to Economics, Poverty Studies, and Foreign and Defense Policy:

Michael Barone:

The winner of the prime time debate: Marco Rubio. His answers were delivered fluently and struck a chord with the Republican electorate. He was also, as Napoleon said he wanted his generals to be, lucky: he wasn’t called on to talk about immigration, an issue on which he is arguably out of sync with the base, nor was he called on to respond to Ted Cruz’s attacks on sugar subsidies, which he supports. His foreign policy answers were strong and well-informed. On many issues he was in line with Jeb Bush, but his responses were more dramatic and fluent, while Bush seemed to stammer a bit in presenting carefully planned and well crafted responses.

Also strong was Ted Cruz who made several very strong interventions, and Carly Fiorina who came on strong in the second hour. Rand Paul made a pitch for what his critics call his isolationist policies, but I think it was an effort in a losing cause—and probably has been ever since ISIS started beheading Americans 15 months ago. Ben Carson handled with aplomb the press attempts to destroy his credibility and also showed finesse on some substantive issues. Donald Trump can scarcely be said to have dominated, but he got his points in effectively from time to time.

John Kasich evidently angered the audience and dial groups with his frequent interruptions, and he oscillated from chiding conservatives to presenting his own brand of conservatives pretty persuasively. But on banking, doesn’t he know that depositors’ money in failed banks is protected by the FDIC?

The undercard debate was dominated by Chris Christie, which kept referring to the need to defeat Hillary Clinton. To my mind, he was successful in fending off the contrary argument advanced by Bobby Jindal, against electing a “big government conservative.” Jindal’s plaints that congressional Republicans had failed to keep promises to stop Obama policies blithely ignored the fact that the Constitution gives the president a veto. Rick Santorum from time to time made the point that nuclear family breakdown has hurt many Americans and prevented them from rising—a valid point, supported by statistics—but his explanations of how to reverse that trend were less convincing. He gave off an air of nostalgia, recounting how he had helped pass welfare reform in the Senate nearly 20 years ago. His recounting of the change in the culture of the Veterans Administration was genuinely interesting. There was also a mellow and nostalgic tone to much of Mike Huckabee’s responses; he seems to enjoy still being in the race.

Karlyn Bowman:

More than the other candidates on the stage tonight, Chris Christie and Jeb Bush took the debate to Hillary Clinton on specific issues. Christie was the strongest candidate in the undercard debate, using humor and engaging in some sharp exchanges with Bobby Jindal, whose own bombastic style seems less attractive with each debate.

Jeb Bush was much stronger than in previous debates, but his reticence hurts him in these free for alls. He showed his policy chops in many areas, something we have seen before. The front runners in recent polls, Trump and Carson, probably didn’t gain ground. Given the controversies of the past week Carson was probably well served by staying in the background for most of the debate. His closing statement was moving. There didn’t seem to be a clear winner, although Rubio’s eloquence continues to impress. Every candidate had strong moments.
It was also nice to hear our AEI emeritus colleague Michael Novak mentioned by John Kasich.

Timothy P. Carney:

Marco Rubio and Ted Cruz know how to debate, and so they won Tuesday night. Beyond their rhetorical skills, they know how to tap into the conservative psyche.

Rubio channels Ronald Reagan’s optimistic demeanor, but has moved beyond Reagan’s policy specifics. Cruz hits the conservative hot buttons well, and has improved his debating style.

Going forward, it’s easy to see this becoming a two man race. If Jeb continues to struggle, and Carson and Trump fade as Herman Cain did four years ago, this could come down to Rubio versus Cruz.

Kevin Corinth:

Governor Kasich said that greed is not good. He also said that capitalism is a great force for good in the world. I agree on both counts.

Norm Ornstein:

Eight debaters is certainly better than 11 but it is still too many. It means that moderators have to struggle to keep time limits and, as we have seen in other debates, fail. The most dismaying element of this debate on economic policy is that none of the candidates appear to have read, much less absorbed, the innovative ideas and clear thinking of Michael Strain, Jim Pethokoukis, Kevin Hassett or other reform-minded conservative economists and economic thinkers. Instead, they all promoted ideas that appealed to the antediluvian base.

Looking at it strictly from the perspective of debate points aimed at the activist primary and caucus audience, Ted Cruz, Marco Rubio, and Donald Trump did well. Rand Paul had by far his best debate. Ben Carson proved shaky on economic policy and foreign-policy, but likely did nothing to deter his existing supporters. For Jeb Bush and John Kasich espousing commonsense mainstream views on financial matters, that probably left them out of step with a more radical and populous Republican base. Carly Fiorina did not do much to help her cause. My guess is that Cruz, Rubio, Trump and Carson will be clear leaders, distancing themselves from the others. I do have a new slogan for Marco Rubio: We need a president who can weld us together.

Jim Pethokoukis:

The GOP debate showed a real difference of opinion between libertarians like Rand Paul and conservatives such as Marco Rubio when it comes to defense spending and tax relief for American families.

Ramesh Ponnuru:

We have had enough of these debates now that some patterns are falling into place. Rubio, Fiorina, and Cruz are consistently good performers. Carson is always low-key, and sometimes chooses to dampen everyone else’s mood too — for example, using his closing statement to tell us how many Americans had died of drug addiction during the debate. Trump uses a fairly restricted vocabulary, but shows a fair amount of knowledge when a policy question intersects with his biography. Rand Paul and John Kasich are irritable, and don’t do much to hide it.

Jeb Bush was the candidate with the most at stake in tonight’s debate. If he had done as badly as he did at CNBC, the calls for him to leave the race would have become deafening. He did not have a great comeback tonight, but he held his own. Sometimes he did better than that: His answer on energy was a better general-election message on that subject than any of the other candidates offered, and he was more focused than anyone else on making the case against Hillary Clinton. The question now is whether that will be enough to reassure his donors–and start winning over some voters.

Angela Rachidi:

In many ways, GOP debate number four felt very different from prior debates. The questions were better, eight candidates on stage was somewhat more manageable, and the candidates were less hostile to the moderators. But the performances seemed the same with only a few memorable moments. Rubio, Cruz, and Fiorina performed similarly to past debates, but their routines are starting to feel stale and too rehearsed. Rubio was much stronger when he went off script after being challenged by Rand Paul on his spending proposals, including his defense of families and military spending. He needs to do more of that in these debates to continue his ascension.

The stand out of the night might just be Dr. Carson. Even though he still faces a number of challenges, it’s becoming clear why he is doing well in the polls. He responds with authenticity and talks frequently about his concern for people, including the middle-class and the poor, in a way that doesn’t feel forced. Bush was also much stronger this debate, with more genuine responses than past performances and a clear grasp of the issues facing us today. But overall, few policy specifics were discussed, including how to realistically get the economy going again so more people can work and earn their own success. I would appreciate a forum where those ideas can truly be debated.

Derek Scissors:

Actually, Mr. Trump, someone has read the Trans-Pacific Partnership. It has flaws but it is certaintly not terrible.

Governor Kasich, the TPP has to work economically. Trying to justify a free trade agreement on security grounds immediately suggests it is not a good free trade agreement.

Senator Paul, Trade Promotion Authority (TPA) grants the president authority only if he meets Congressional guidelines. What foreign government is going to let us play good cop (the president) and bad cop (Congress)?

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The shocking truth: Parents prefer free college over college they have to pay for

Money Magazine is out with a new poll today on college affordability. The survey — a joint effort by Money and Kaplan Test Prep — asked parents of high school-aged college aspirants whether they agreed or disagreed with particular proposals to improve college affordability.

The survey asked about a range of ideas, from providing two years of college free (an Obama Administration favorite), to raising state taxes in order to lower tuition at public colleges, to a free first year of college delivered via online courses. Also on the list was a new form of private financing where funders pay the cost of a student’s education in return for a percentage of their post-college income for a set period of time (an idea we’ve discussed a few times here at AEI and are about to examine with our own field research).

The results were as follows:

 

A couple things jump out.

1)People like things that are free and/or paid for by other people more than things they have to pay for themselves.

To their credit, the items do make an effort to highlight some of the trade-offs inherent in different public spending (that is, higher taxes, elimination of other financial aid programs, higher tuition for some). But it’s not at all surprising that a free year or two of college is more popular than financing a student has to pay back. One is “free” to the student, the other isn’t. It’s like asking whether people would prefer a free car to one that they have to take out a loan to pay for.

Some might counter by pointing out that these parents were also more bullish on raising taxes to lower tuition than they were on an income-share approach. This is somewhat closer to a “pay-for,” but even here it’s worth pointing out that this group would disproportionately benefit from higher taxes that are earmarked for public colleges. Higher taxes apply to everyone, whether they have kids in college or not. To borrow from Poli Sci 1, the benefits of such a proposal are concentrated among the folks in the sample while the costs are diffuse.

To be clear: the point isn’t to defend ISAs as some silver bullet. They’re but one tool in a broader reform agenda, and we still don’t know enough about how consumers view them. In fact, we are about to launch our own effort to study how potential users view the idea, especially compared to traditional student loans.

It’s not at all clear that individuals would prefer this to a traditional loan, and students may be concerned about the length of repayment, the percentage of income, or both. These are important questions to ask.  But it shouldn’t be all that surprising that beneficiaries prefer things that are free to things that aren’t.

2)None of the ideas get majority support.

Much more interesting, to me, is the fact that none of these ideas get majority support. Despite being the very population that would benefit from two years of free college, just 45% agreed with the proposal. Yes, more agreed than disagreed (a 16% positive advantage), but still not a majority. Interestingly, one-year of free online college for students living at home was only marginally less popular (44% to 32%) despite delivering less of a benefit.

It would be interesting to see these results broken out by income group, where I’d imagine there are differences.

The way the free college question was worded — calling for the elimination of existing aid programs and tax benefits to pay for free two-year college — likely has something to do with the lukewarm support. Parents who have benefited from these existing policies may be less sanguine on eliminating them entirely even if it buys two years of free college.

In sum: there’s plenty of further research to be done on these topics. I’d be particularly interested to see how support for various proposals differs across parents of school-age kids and the

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Some deal-making advice for Trump on China: Never interfere with a trading partner when they are doing you a favor

Donald Trump doesn’t like what he calls China’s “currency manipulation.” He outlines his dislike for China’s monetary policy in today’s Wall Street Journal and presents his plan to address that “manipulation” on “day one of a Trump administration.”

I’ve taken the liberty of editing some of Trump’s op-ed to present the opposing and positive side of China’s currency policy, here’s my version:

New Title: “Ending China’s Currency Manipulation Generous Subsidy of American Consumers and Businesses”

New Sub-title: “China’s de facto tariff on imported goods appreciation of the US dollar has cost saved the U.S. billions of dollars and supported millions of jobs.”

Revised Text: Economists estimate that the yuan is undervalued US dollar is overvalued anywhere from 15% to 40%. Through manipulation of the yuan appreciating the US dollar, the Chinese government has been able to tip the international trade balance in their direction our favor by imposing a de facto tariff on all imported goods selling American consumers and businesses imported Chinese goods at a 15-40% discount. Imagine the favorable impact these trade practices and low prices have had on our weakened manufacturing base, our agriculture industry and every small business unable to compete internationally. nation’s consumers, businesses, and manufacturers.

Unfortunately, deal-maker extraordinaire Mr. Trump wants China to stop giving us such a good deal, and plans (if elected) to impose new taxes on Americans buying products from China…..

To end China’s policy of selling Americans merchandise at a 15 to 40% discount, the U.S. Treasury Department will designate China a currency manipulator on day one of a Trump administration. This designation will trigger a series of actions that will start the process of forcing Americans to pay higher prices by imposing countervailing duties on American consumers and businesses who buy cheap Chinese imports, defending burdening American manufacturingers, businesses, and consumers who buy goods from China and preserving destroying American jobs. I do this not because it make sense economically – after all, who doesn’t like low prices and the opportunity to get a 40% discount from a seller – but because it sells well politically and is a great way to generate support for my campaign.

MP: As I’ve pointed out before, the “manipulation” of China’s currency (i.e. appreciating the US dollar) is actually to the distinct advantage of millions of American consumers (especially low-income Americans) and U.S. businesses buying products and inputs made in China. Those two groups certainly aren’t complaining about a stronger dollar and low-priced Chinese products, and in fact would be made worse off if they were forced to pay higher prices from Trump’s proposed trade policies. After all, the countervailing duties (i.e. taxes) would be imposed not on China, but on American consumers and businesses who buy Chinese goods.

To summarize:

1. China’s currency manipulation is a form of foreign aid to the US, and is specifically to the direct advantage of millions of U.S. consumers, especially low-income groups, and to the direct advantage of thousands of American companies and manufacturers (and their employees) buying inputs from China.

2. Like other forms of mercantilism and protectionism, imposing tariffs and duties on “cheap Chinese imports” would favor certain domestic producers over millions of consumers and import-buying companies, but would make the United States worse off, not better off, on net.

3. Instead of complaining, we and Mr. Trump should be thankful for China’s foreign aid to Americans through a strong dollar, and for the undervalued goods that collectively save American consumers and companies billions of dollars every year (see Venn diagram above).

Bottom Line: Assuming that Mr. Trump wouldn’t object to China (or any other country) sending products to the United States for free, then on what basis could he object to currency “manipulation” that allows Americans to purchase undervalued Chinese imports at a steep discount of up to 40%? Mr. Trump views himself as the quintessential deal-maker, but he’s apparently overlooked what might be the most effective strategy for dealing with China: Never interfere with a trading partner when they are doing you a favor.

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Veterans in public office

For well-on thirty years, military veterans have been a decreasing presence in Congress. From the high-water mark of the 1970s when veterans made up more than three-fourths of Congress, today their numbers have receded by about 75%, inviting concern from more than one quarter about the negative ramifications a national legislative body with miniscule practical military knowledge — but significant powers over the purse and the sword — has both domestically and abroad.

But looked at from a different perspective, while Washington legislators are more likely to have served in the armed forces than those at the state level, legislators at the state and federal level are more likely to be veterans than the general population.

In 1971, veterans made up 72% of members in the House of Representatives, and 78% of the Senate. In 1991, the Congress that approved the use of force against Iraq in Operation Desert Storm had only slightly more veterans than non-veterans.

Three Congresses later, the percentage of veterans had dropped to 32%. The 114^th Congress currently features a Senate with 20% of its members as veterans and a House with 18%, split 70% Republican and 30% Democratic in the former, 75% Republican and 25% Democratic in the latter.

Across the 50 states, 7 governors and 4 lieutenant governors have military experience (Governors Robert Bentley, AL-R; Rick Scott, FL-R; Nathan Deal, GA-R; Butch Otter, ID-R; Terry Branstad, IA-R; Steven Beshear, KY-D; Gary Herbert, UT-R; Lt. Governors: Tim Griffin, AK-R; Mike Stack, PA-D; Matt Michels, SD-R; Ralph Northam, VA-D). Also at the state level, out of 1,966 state senators, 249 share military service. Out of a total of 50 states, only one—Mississippi—currently has no state senator who has served in the military (but its US Senator Thad Cochran served in the Navy for several years).  Of all state senators, current tabulations put 170 as Republican, 79 Democratic.

The predominantly red numbers spell out an interesting, though somewhat misleading story.

Maryland, North Carolina, and Oklahoma have the most veterans in their state senate, each with 11, followed by North Dakota (10), Indiana and Nebraska (9). California, Maryland, Minnesota, Utah, and Vermont sit at the other end of the scale, each with only one veteran state senator. Of states with more than one veteran senator, however, the majority have both Democratic and Republican senators. Only nine states –South Carolina (7), Idaho (5), Tennessee (5), Wyoming (5), Maine (4), Missouri (4), Pennsylvania (4), Kansas (3), and New Hampshire (3)—have all Republican veteran senators, while Hawaii (2) has the distinction of being the only state whose veteran state senators are both Democrats. Hawaii’s two members in the US House of Representatives, Mark Takai and Tulsi Gabbard, also have military experience, and are also both Democrats.

Military experience is not a guarantor of Republican Party affiliation, in other words. Veterans as well as veterans in public office mirror the nation when it comes to party identification.

Today’s veteran population stands somewhere near 21.3 million, taking up 9% of the adult population and just barely 7% of the U.S. population as a whole. Meanwhile, only around 1% of the population today volunteers to serve in the armed forces — a heavy contrast with the over 12 million who were active duty military personnel in 1945. When veterans made up over 70% of Congress in the 1970s, they were a little less than 14% of the total population, but double the percentage they are today.

Thus while the decline of veterans in public office has been sharper than the decline in the overall veteran population, the decline of veterans either running for or being elected to office is due in large part to the overall decline in the veteran population. Nonetheless, our elected officials are still more likely to have served in the armed forces than the constituencies whom they continue to serve.

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DC’s plan to end homelessness is deceptive

Washington, D.C. is planning to shut down its massive and frequently criticized homeless shelter for families. In its place will be a collection of smaller shelters placed throughout the city. Another key change is that shelter will be available to families all year-round, not just during the winter. With this new plan, D.C. Mayor Muriel Bowser wants to lead the nation in “ending homelessness” by 2020. Will it work?

No, the mayor’s plan will not end homelessness. Just the opposite is more likely – new, smaller shelters open year-round will attract more poor families into the system. And with increased demand there is a good chance the massive family shelter won’t come down at all. But the plan isn’t doomed. With some adjustments it could still be an improvement for some of the District’s poorest families.

But first let’s be clear. This plan will not end family homelessness in any real sense of the word. Shelters will be smaller, more humane, and located in nicer areas. Families will have the right to enter shelters throughout the year instead of only during the winter. The mayor plans to deny a few additional families shelter but admits that there is already a “narrow front door.” Top this all off with increasing rent and stagnating opportunities for poor families, and it’s hard to believe that family homelessness won’t increase significantly.

Perhaps that’s why the plan uses a deceptive definition of “ending homelessness.” Victory will be declared if the average stay in shelters falls below 60 days (down from the current average of about 180 days).

Here’s why that’s deceptive. There could be twice as many families in shelters every single day of the year. But if families stay in shelters for short periods of time, the average length of stay falls.

This could be just what happens. The plan will quickly move families out of shelters using temporary rental subsidies. This could create a revolving door into and out of shelters if families can’t make it on their own when their subsidies run out. But this would make the plan look more successful, because each time a family stays in shelter for a short period of time, the average length of stay falls.

The plan is again deceptive when claiming that the official annual homeless count will fall by 65%. The problem? The annual count is conducted in January, precisely when the system has traditionally been overwhelmed as shelters opened up for the winter. Offering shelter to families throughout the year will probably reduce the shelter rolls in January, but it will also increase the rolls in July. Spreading homelessness out isn’t the same thing as ending it.

This isn’t to say that extending access to shelter throughout the year is a bad thing. But the plan’s deceptive definition of success begs the question – is this plan more about helping poor families or advancing political agendas?

The more important question is how the plan will affect poor families in the District. The positives are that families will sensibly be able to access shelter throughout the year, and that shelters will be smaller and more humane. The downside is that additional funding needed for year-round shelter and housing subsidies will limit investment in D.C. families themselves. The result could be a revolving door between homeless shelters and subsidized housing.

How can the plan be fixed? The only way to make it work is if families are eventually able to make it on their own – without shelter or ongoing housing subsidies. This is a big challenge in the expensive D.C. housing market. Public assistance from other mainstream programs must be combined with earnings from work. That means more effective (and costly) support for finding and keeping employment. Here are some ideas to pay for it.

First, the city could charge families a fixed percentage of their income for using shelters. This could help offset the cost of housing subsidies and work support upon exiting. Second, housing subsidies should be made more flexible, allowing families to save money by sharing housing with relatives or roommates. A portion of the cost savings could be provided in the form of lengthier support, while the rest would shore up funding gaps.

The city should also get creative. Given the plan to spread shelters throughout the District, existing neighborhood residents should be called on to offer resume writing workshops and connections to job opportunities for their new homeless neighbors. Rather than fight to keep the homeless out, they can fight to lift them up.

Of course, real solutions don’t have much chance if the mayor focuses on deceptive definitions of success. The mayor’s vision has potential – she just needs to scrap the political talk and focus solely on helping poor families thrive.

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Fortress Europe is the biggest threat to Ukraine’s future

The European Union finds itself in the midst of multiple crises. It might be torn apart by the refugee crisis, the rise of nationalistic populism in Central Europe, the repercussions of a possible Brexit, or by the return, in some form, of the debt crisis that has been ravaging Greece for over five years now. However, the risk that these crises pose to the EU is eclipsed by their cumulative effect on the EU’s neighbours, especially Ukraine.

In all likelihood, the EU will eventually muddle its way out of its current troubles. In the process, however, it is bound to become more inward-looking and wary of engaging its eastern partners. The united front that the EU has shown in the aftermath of Russia’s invasion of Ukraine is fragile. Sooner or later, it will be replaced by a cruder form of realism that will put the immediate German or French ‘national interest’ first, effectively rewarding Vladimir Putin for his aggression.

A recent visit to Moscow by Sigmar Gabriel, Germany’s vice-chancellor, with the explicit purpose of discussing bilateral economic ties, seems to be a response to ongoing pressure by powerful economic interests that want to relax the existing sanctions regime – as does the trip made by the former president of France, Nicolas Sarkozy.

Click here to read the full article.

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Do you believe?

Do you believe that America is a force for good in the world?

Before you say “yes,” please consider carefully that this is a serious commitment. It is to say that our ideas of democratic capitalism are good for us and are good for others, and thus as generous, decent people we are willing to share them. We do not deny America’s errors, but still see the motives of our nation as fundamentally just, and the net effects of our influence as making the world a better place.

I believe these beliefs are fair and right, because I have seen the evidence all around the world.

Just a week ago, my colleagues and I were in an Indian slum called Dharavi, in Mumbai—the area featured in the movie Slum Dog Millionaire. We were shooting a new film called The Secret to Happiness. I walked for hours in the narrow alleyways among the pottery factories, tanneries, and plastic recycling businesses with a 34-year old man named Krishna Pujari. Krishnastarted out with nothing, in ways we can’t even imagine, and has pulled himself out of poverty with a small business.

Krishna is deeply proud of his success. I asked him his secret. His answer? “Entrepreneurship.” And what does that mean? Here’s his definition: “Build something, earn a living, serve others.” Build, earn, and serve.

Now where do you suppose these ideas came from? He’ll tell you himself: from America. He’s never even been here, but he knows: This is what Americans stand for. This is our ethos, spreading around the world, lifting up people like him, and countries like India.

Krishna is not alone, and is not even an isolated case. Since 1970, billions around the world have been lifted out of absolute poverty, and billions have seen democracy for the first time. Why? Two reasons.

First, they saw how we live. They saw an open society, the rule of law, property rights, and the rewards of entrepreneurship and work. They saw our freedom and our prosperity, and by copying the ideas, the inspiration and the drive that makes this country so great, they threw off the chains of poverty by the hundreds of millions.

Second, America has been a servant leader nation. We have a military, diplomatic, and cultural commitment to sharing our values and system around the world—usually peacefully, but when necessary, with force.

It was no government program or parastatal agency, but the American model of democratic capitalism and strength that gave opportunity to two billion of our brothers and sisters around the globe to pull themselves up—and these ideas can do the same for the next 2 billion.

But it can only happen if we retain our confidence in the greatness of our nation, believe in the fundamental goodness of our values, learn from our mistakes, and maintain a commitment to serve the rest of the world.

And we need something else as well: friends. We can’t honor our commitment to the world by ourselves. We need friends who share our values. We need outposts of democratic capitalism. We need people who believe in equality, freedom, and the fundamental potential of every human being.

Friends are hard to find in the world. Too many nations are silently glad we lead, and find it most convenient to free-ride on American strength, enjoying the benefits while publicly grousing about the morality of our cause and the principles behind our leadership. For others, American values are a threat—a threat to their power, which they maintain at the cost of the poor and oppressed.

So when we have a true friend—a collaborator nation in the optimistic, joyful experiment of building a better world for the people who need it the most—it is important to celebrate that friendship, and to show how much it means to us. That is what we do tonight.

No nation in the world is a better friend and partner to America in the fight for freedom and democratic capitalism than Israel. No nation mirrors our values more faithfully. Israel is truly America’s sister nation in the fight for a better, more just world. Because like the United States, Israel is a beacon of hope and a model for its neighbors, for its region, and for the world.

Tonight we will have a conversation about this friendship and its future with Israel’s Prime Minister, Benjamin Netanyahu. Prime Minister Netanyahu tonight receives AEI’s Irving Kristol Award—AEI’s highest honor.

In a very real way, honoring our friend is our commitment to our own nation’s values. And that is a commitment that I know each of you proudly shares.

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A Trump in a China shop

Donald Trump is not known for letting facts get in the way of a good election argument.

This is certainly true of the potshots that he is taking at Chinese exchange rate policy, potshots he bases on the erroneous premise that the Chinese currency remains between 15 and 40% undervalued. This leads Mr. Trump to policy recommendations that, if implemented, would be highly damaging to both the US and the global economies.

Republican presidential candidate Donald Trump greets supporters in Springfield, Illinois, November 9, 2015. Reuters.

It seems to have escaped Mr. Trump’s notice that, while the Chinese currency might have been undervalued in 2008, this is no longer the case today. Since 2010, the US Treasury estimates that the Chinese currency has appreciated in real effective terms by around 30%. It has done so at a time when other currencies like the Japanese yen and the Euro have experienced major depreciations while the Bank of Japan and the European Central bank have engaged in money printing binges. As a result, the International Monetary Fund now considers that the Chinese currency is at approximately its fair value.

A further indication that China’s currency is no longer undervalued is the major turnaround in its trade performance. Whereas in 2010 China had an external current account surplus of around 10% of GDP, over the past few years, as a result of the large appreciation in the Chinese yuan, that surplus has declined to barely 3% of GDP. In addition, the most recent Chinese trade numbers are indicating that China is experiencing a major decline in its exports — hardly an indication of an undervalued currency.

Most troubling yet is that Mr. Trump seems to be oblivious to the fact that capital is now fleeing China at an alarming rate, as Chinese domestic residents have growing doubts about the country’s future direction. According to US Treasury estimates, those outflows have totaled a staggering US$500 billion in the first nine months of this year.

If the Chinese were now to refrain from currency market intervention as Mr. Trump is demanding, there can be little doubt that there would be a major Chinese currency depreciation. There would be nothing then to stop capital outflows from putting strong downward pressure on the currency.  In the context of money printing in Japan and Europe, any sharp depreciation of the Chinese currency would risk triggering a global currency war.

It is very doubtful that this is what Mr. Trump really wants for the United States. But why let such considerations get in the way of China-bashing when such bashing could score points in an election race?

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