The Washington Post reports the Obama administration has revised its Afghan war strategy to include “more energetic efforts to persuade” Afghanistan’s neighbors—including India, China, and the Central Asian republics—to “support a political resolution.” Just yesterday, the New York Times reported that the administration was also relying on Pakistan’s Inter-Services Intelligence spy agency “to help organize and kick-start reconciliation talks aimed at ending the war in Afghanistan.”

This is good news, but also déjà vu. The administration called for “pursuing greater regional diplomacy” back in 2009. It also said it would ask “all countries who have a stake in the future of this critical region to do their part.” Countries in the region do have a stake in Afghanistan’s future; America, however, has few effective instruments for submerging the differences among competing powers.

Take our relationship with Iran. It has made significant inroads with Afghanistan’s Hazara and Tajik communities and is well-positioned to be a key player in the region. But Tehran and Washington seem neither close to engaging in direct talks nor willing to make reciprocal concessions for the cause of furthering peace. The irony is that after 9/11, American and Iranian interests initially converged in Afghanistan: Tehran cooperated with Washington to overthrow the Taliban regime, and during the Bonn negotiations helped broker a compromise between President Karzai and the Northern Alliance.

America’s complicated relationship with Iran is one reason why what U.S. officials perceive to be in America’s best interests may not be synonymous with the pursuit of peace. Isolating Iran, or even Pakistan for that matter, will hurt the substance of negotiations, increase the incentive for these countries to sabotage peace, and hinder Washington’s ability to shape a coherent regional strategy. Even if Washington were to engage Tehran and Islamabad, they may very well decide to protract the bargaining process to convey that time is on their side (it is). One reason why the administration’s 2009 effort may have faltered was that Pakistan—a major player in Afghanistan’s internal affairs (to the consternation of many Afghans)—has come to feel that it can manage the terms of reconciliation. In fact, it is this belief that tempers Pakistan’s eagerness to be more accommodating toward the United States, which is why the case for American humility is key when it comes to the subject of negotiations.

Peace will not be perfect. Problems will rise when competing interests collide on certain core issues. Nevertheless, all parties must be sufficiently dedicated to reaching a consensus on what constitutes a manageable settlement. After all, some countries will seek to stymie their enemy’s provision of assistance to Kabul (i.e. Pakistan vis-à-vis India). Getting these countries to think otherwise will necessitate a shift in said country’s perceptions of others’ intentions.

As I wrote last week, U.S. officials understand the enormity of problems they confront in this vexing region. Proponents of peace are not blind to these difficulties. Unfortunately, much like the current nation-building effort, when it comes to regional engagement, U.S. officials could be making yet another ambitious commitment that is beyond their ability to carry out.

Cross-posted from The Skeptics at the National Interest.

A Step Forward in Afghanistan, If We Are Willing to Take It is a post from Cato @ Liberty - Cato Institute Blog

• How can we have an “adult conversation” on the budget if the White House won’t release its budget and deficit projections to the public?
• A new guide to India’s uneven spread of economic freedom could help state-level policymakers there improve the welfare of citizens there.
• “When the Cato guy tells you someone is corrupting the idea of HSAs, pay attention.”
• Despite having the bully pulpit, and despite touting opinion polls in favor of reform, the Obama administration finds it necessary to use taxpayer funds to tell Googlers what’s best for them.
• Indiana Governor Mitch Daniels has doubled down on the social issues truce–Cato’s John Samples talked about this on Friday on the Cato Daily Podcast:

Monday Links is a post from Cato @ Liberty - Cato Institute Blog

During his visit to India, President Obama should bury once and for all his divisive rhetoric about American companies shipping jobs overseas. Our growing commercial ties with India are a great opportunity, not a problem. U.S. exports to India have doubled in the past four years. American companies that have set up shop in India have helped to fuel demand in that country for U.S. products and services. The president should be celebrating rather than demonizing our deeper economic ties with India.

Commercial Ties with India Are An Opportunity, Mr. President–Not A Problem is a post from Cato @ Liberty - Cato Institute Blog

To make his coming visit to India meaningful, President Obama needs to combat the impression that India fares better with Republican presidents than Democratic ones, because the latter are instinctively more protectionist. In his quest for economic recovery, he has bashed US corporations that outsource jobs to places like India, forbidden companies getting government rescue funds from outsourcing work, and has now enacted higher visa fees for visiting IT professionals which seem designed to hit Indian companies quite specifically. This may be designed to win votes in the Congressional elections, but will not win hearts and minds in India. President Obama needs to state categorically that he will not follow the Great Depression formula of trying to combat unemployment with protectionism.

A better way to create US jobs will be to relax labyrinthine export licensing rules for exports of dual-technology equipment and technology (which can be used for both civilian and defense purposes). India also needs to do its bit by shedding its reputation as world champion in anti-dumping actions (206 in the five years to 2009).

How President Obama Can Make His India Trip Meaningful is a post from Cato @ Liberty - Cato Institute Blog

Free-marketers often point to the varying success of pairs of countries — the United States vs. the Soviet Union, West vs. East Germany, Hong Kong and Taiwan vs. China — to illustrate the benefits of markets over planning, regulation, and socialism. Some even point out the closer but real differences in GDP per capita between the United States and Western Europe. In his 1984 book Endless Enemies (p. 380) Jonathan Kwitny added the less familiar pairs “Morocco versus Algeria, Malaysia versus Indonesia, Thailand versus Burma, Kenya versus Tanzania.” Now Rama Lakshmi reports in the Washington Post that we can see the results of two systems of political economy in one country:

It didn’t take long for the first athletes arriving in New Delhi last week for the upcoming Commonwealth Games to catch a glimpse of modern India’s two faces.

Their gateway to the country was the capital’s gleaming new international airport terminal, built by a privately led consortium and opened in June four months ahead of schedule.

But the official wristbands that the visitors were handed at the airport turned out to be an emblem of India’s famous red tape and government inefficiency. When the teams reached the athletes’ village, the police guarding the facility refused to recognize the IDs, saying that the Games Organizing Committee had not sent the required authorization order.

The jet-lagged athletes stood about under a tree for hours with their luggage, calling their embassies for help, and the problem was not finally resolved for four more days.

To observers, the incident illustrated more than just the well-documented sloppiness that has marked India’s preparations for the Games. It also underscored the gap that has emerged between a government rooted in a slower-moving, socialist era and a private entrepreneurial class that is busy building global IT companies, the world’s largest oil refineries and spectacular structures such as the $2.8 billion airport terminal.

“It is about two aspects of the India story,” said Rajeev Chandrasekhar, an entrepreneur and member of Parliament. “India’s private sector has been exposed to competition and therefore has developed capability. Accountability is firmly built into the entrepreneurial mind-set. But the government structure is a relic of the colonial past and continues to plod along.”…

For the Delhi [airport] project, [Grandhi Mallikarjuna]Rao said, his company worked with 58 government agencies.

“Our nation is in the process of transition from a command-and-control economic system to a more efficient market-driven structure,” he said. “It will take some time till this transition is complete.”

Given all this history, the interesting question is why some people in the United States want to continually transfer such vital functions as energy and health care from the competitive, accountable, capable entrepreneurial sector to the slower-moving, plodding, command-and-control bureaucratic sector. (Of course, the already-government-influenced health care and energy industries are not the most entrepreneurial sectors of the economy. But as the examples above demonstrate, even imperfect markets work better than government direction. Nor are the government-run local schools very competitive or accountable, but they are more so than they will be under tighter federal control.)

Comparative Political Economy is a post from Cato @ Liberty - Cato Institute Blog

A $600-million bill to enhance border enforcement has hit a temporary snag in the Senate, but it is almost inevitable, with an election only a few months away, that Congress and the president will spend yet more money trying to enforce our unworkable immigration laws.

“Getting control of the border” is the buzz phrase of the day for politicians in both parties, from Sen. John McCain, R-Ariz., to Sen. Chuck Schumer, D-N.Y. Never mind that apprehensions are down sharply along our Southwest border with Mexico, mostly I suspect because of the lack of robust job creation in the unstimulated Obama economy.

Meanwhile, since the early 1990s, spending on border enforcement has increased more than 700 percent, and the number of agents along the border has increased five-fold, from 3,500 to more than 17.000. (See pages 3-4 of a January 2010 report from the Center for American Progress and the Immigration Policy Center.) Yet the population of illegal immigrants in America tripled during that period. If this were a federal education program, conservatives would rightly accuse the big spenders of merely throwing more money at a problem without result.

To pay for this politically driven expenditure, Congress plans to nearly double fees charged for H1-B and L visas used by foreign high-tech firms to staff their operations in the United States. The increased visa tax will fall especially hard on companies such as the Indian high-tech leaders Wipro, Infosys, and Tata.

This all has the ring of election-year populism. Congress pretends to move us closer to solving the problem of illegal immigrants entering from Latin America by raising barriers to skilled professionals coming to the United States from India and elsewhere to help us maintain our edge in competitive global technology markets.

‘Border Enforcement’ Bill Driven by Election-Year Politics is a post from Cato @ Liberty - Cato Institute Blog

An article today in BRIDGES Weekly Trade News Digest (What? You don’t subscribe??) contains an explicit rejection by India’s trade minister of the idea that carbon border tax adjustments belong in the WTO’s agenda.  Border tax adjustments in this context refers to de facto tariffs that would “level the playing field” for domestic producers competing with foreign producers not subject to climate change policies of an equivalent rigour, also called “border carbon adjustments” or variations on that theme.

While Minister Khullar predicts that these sorts of measures will be in place in 2-3 years time, he rejects that the WTO is the forum to deal with environmental issues.

Furthermore, countries introducing such measures can expect litigation:

India and other developing countries will undoubtedly challenge the true impetus behind the [border carbon adjustment] measures.

“Such measures imposing restrictions on imports on the grounds of providing a ‘level playing field’, or maintaining the ‘competitiveness’ of the domestic industry, etc are likely to be viewed as mere protectionist measures by the developed world to block the exports of the poorer nations,” [a recent report from an Indian think-tank closely connected with the Indian government] reads. “This is because there is little empirical evidence that companies relocate to take advantage of lax pollution controls.”

The [report] argues that such unilateral trade measures will inevitably lead to tit-for-tat trade retaliation that could spiral into an all-out trade war. Such warnings have also been raised by China and several think tanks following the issue.

I’ve written before on the dangers of introducing climate change issues into the WTO (and Dan Griswold has written more broadly on why labor and environmental standards don’t mix well with the aim of freeing trade) but this is yet another firm, unequivocal warning to developed countries that their proposals (and they are still just proposals at this stage) will have consequences. Developed country politicians who insist on forcing rich-world standards on the poor world should listen carefully.

India Explicitly Rejects Bringing Environmental Issues Into WTO is a post from Cato @ Liberty - Cato Institute Blog

During his SOTU address last week, the president declared it a national goal to double our exports over the next five years.  As my colleague Dan Griswold argues (a point that is echoed by others in this NYT article), such growth is probably unrealistic. But with incomes rising in China, India and throughout the developing world, and with huge amounts of savings accumulated in Asia, strong U.S. export growth in the years ahead should be a given—unless we screw it up with a provocative enforcement regime.

The president said:

If America sits on the sidelines while other nations sign trade deals, we will lose the chance to create jobs on our shores. But realizing those benefits also means enforcing those agreements so our trading partners play by the rules.

Ah, the enforcement canard!

One of the more persistent myths about trade is that we don’t adequately enforce our trade agreements, which has given our trade partners license to cheat.  And that chronic cheating—dumping, subsidization, currency manipulation, opaque market barriers, and other underhanded practices—the argument goes, explains our trade deficit and anemic job growth.

But lack of enforcement is a myth that was concocted by congressional Democrats (Sander Levin chief among them) as a fig leaf behind which they could abide Big Labor’s wish to terminate the trade agenda.  As the Democrats prepared to assume control of Congress in January 2007, better enforcement—along with demands for actionable labor and environmental standards—was used to cast their opposition to trade as conditional, even vaguely appealing to moderate sensibilities.  But as is evident in Congress’s enduring refusal to consider the three completed bilateral agreements with Colombia, Panama, and South Korea (which all exceed Democratic demands with respect to labor and the environment), Democratic opposition to trade is not conditional, but systemic.

The president’s mention of enforcement at the SOTU (and his related comments to Republicans the following day that Americans need to see that trade is a two way street — starts at the 4:30 mark) indicates that Democrats believe the fig leaf still hangs.  It’s time to lose it.

According to what metric are we failing to enforce trade agreements?  The number of WTO complaints lodged? Well, the United States has been complainant in 93 out of the 403 official disputes registered with the WTO over its 15-year history, making it the biggest user of the dispute settlement system. (The European Communities comes in second with 81 cases as complainant.)  On top of that, the United States was a third party to a complaint on 73 occasions, which means that 42 percent of all WTO dispute settlement activity has been directed toward enforcement concerns of the United States, which is just one out of 153 members.

Maybe the enforcement metric should be the number of trade remedies measures imposed?  Well, over the years the United States has been the single largest user of the antidumping and countervailing duty laws.  More than any other country, the United States has restricted imports that were determined (according to a processes that can hardly be described as objective) to be “dumped” by foreign companies or subsidized by foreign governments. As of 2009, there are 325 active antidumping and countervailing duty measures in place in the United States, which trails only India’s 386 active measures.

Throughout 2009, a new antidumping or countervailing duty petition was filed in the United States on average once every 10 days.  That means that throughout 2010, as the authorities issue final determinations in those cases every few weeks, the world will be reminded of America’s fetish for imposing trade barriers, as the president (pursuing his “National Export Initiative”) goes on imploring other countries to open their markets to our goods.

Rather than go into the argument more deeply here, Scott Lincicome and I devoted a few pages to the enforcement myth in this overly-audaciously optimistic paper last year, some of which is cited along with some fresh analysis in this Lincicome post.

Sure, the USTR can bring even more cases to try to force greater compliance through the WTO or through our bilateral agreements.  But rest assured that the slam dunk cases have already been filed or simply resolved informally through diplomatic channels.  Any other potential cases need study from the lawyers at USTR because the presumed violations that our politicians frequently and carelessly imply are not necessarily violations when considered in the context of the actual rules.  Of course, there’s also the embarrassing hypocrisy of continuing to bring cases before the WTO dispute settlement system when the United States refuses to comply with the findings of that body on several different matters now.  And let’s not forget the history of U.S. intransigence toward the NAFTA dispute settlement system with Canada over lumber and Mexico over trucks.  Enforcement, like trade, is a two-way street.

And sure, more antidumping and countervailing duty petitions can be filed and cases initiated, but that is really the prerogative of industry, not the administration or Congress.  Industry brings cases when the evidence can support findings of ”unfair trade” and domestic injury.  The process is on statutory auto-pilot and requires nothing further from the Congress or president. Thus, assertions by industry and members of Congress about a lack of enforcement in the trade remedies area are simply attempts to drum up support for making the laws even more restrictive.  It has nothing to do with a lack of enforcement of the current rules.  They simply want to change the rules.

In closing, I’m happy the president thinks export growth is a good idea.  But I would implore him to recognize that import growth is much more closely correlated with export growth than is heightened enforcement.  The nearby chart confirms the extremely tight, positive relationship between export and imports, both of which track similarly closely to economic growth.

U.S. producers (who happen also to be our exporters) account for more than half of all U.S. import value.  Without imports of raw materials, components, and other intermediate goods, the cost of production in the United States would be much higher, and export prices less competitive.  If the president wants to promote exports, he must welcome, and not hinder, imports.

Time to Lose the Trade Enforcement Fig Leaf is a post from Cato @ Liberty - Cato Institute Blog

Three items in the news this week remind us why we should be glad we live in a more global economy. While American consumers remain cautious, American companies and workers are finding increasing opportunities in markets abroad:

• Sales of General Motors vehicles continue to slump in the United States, but they are surging in China. The company announced this week that sales in China of GM-branded cars and trucks were up 67 percent in 2009, to 1.8 million vehicles. If current trends continue, within a year or two GM will be selling more vehicles in China than in the United States.
• James Cameron’s 3-D movie spectacular “Avatar” just surpassed $1 billion in global box-office sales. Two-thirds of its revenue has come from abroad, with France, Germany, and Russia the leading markets. This has been a growing pattern for U.S. films. Hollywood—which loves to skewer business and capitalism—is thriving in a global market.
• Since 2003, the middle class in Brazil has grown by 32 million. As the Washington Post reports, “Once hobbled with high inflation and perennially susceptible to worldwide crises, Brazil now has a vibrant consumer market …” Brazil’s overall economy is bigger than either India or Russia, and its per-capita GDP is nearly double that of China.

As I note in my Cato book Mad about Trade, American companies and workers will find their best opportunities in the future by selling to the emerging global middle class in Brazil, China, India and elsewhere. Without access to more robust markets abroad, the Great Recession of 2008-09 would have been more like the Great Depression.

Global Markets Keep U.S. Economy Afloat is a post from Cato @ Liberty - Cato Institute Blog

• A glimmer of hope for libertarian public policy in the age of Obama: The War on Drugs may be slowly winding down. “The prospects for reform are better than they’ve been in decades.”

• An overview of religious liberty around the world. Doug Bandow: “Martyrdom did not disappear with imperial Rome.”

• All eyes on India: Party crashers aside, Indian Prime Minister Manmohan Singh’s visit to the U.S. was an important event.

• Patrick J. Michaels on “ClimateGate.” More, here.

• The insanity of housing subsidies: “If you’re thinking to yourself that this is the sort of government-induced behavior that helped create the housing bubble, go to the head of the class.”

• Podcast: “Judicial Takings at SCOTUS“

Tuesday Links is a post from Cato @ Liberty - Cato Institute Blog

• European Union to install its first president.

• How delayed economic reform in India killed 14.5 million children. More details, here.

• It always starts with “good intentions:” How urban planners destroyed the small-town atmosphere in Portland, Oregon and made congestion even worse.

• Lots of talk but little action from the Obama administration on education.

• Podcast: If the Obama administration was serious about job creation in the stimulus plan, why weren’t dollars targeted at states with higher unemployment?

Thursday Links is a post from Cato @ Liberty - Cato Institute Blog

• Drop the neocons: “Republicans should take this opportunity to return to their traditional noninterventionist roots and throw their neoconservative wing under the bus.”

• John Samples on the national impact of this week’s elections: “The evidence suggests the Obama administration might be on the same path that led the Clinton presidency to the election of 1994. But there is an important difference: In 1994, the public had some faith in the alternative to Clinton and the Democrats in Congress.”

• Afghan election analysis.

• A few things you might not know about Bhutan.
  

• Podcast: “Independents and the GOP Victories“

Wednesday Links is a post from Cato @ Liberty - Cato Institute Blog

Apparently Ayn Rand’s popularity is growing on the subcontinent.  For more on Rand’s resurgence, attend or watch online this Cato event next week.

(H/T: Josh Blackman.)

Who Is John Gupta? is a post from Cato @ Liberty - Cato Institute Blog

Maleeha Lodhi, Pakistan’s former ambassador to Washington, and Anatol Lieven, a professor at King’s College London, discuss in the Financial Times how we can exit the Afghan quagmire:

The west should therefore pursue a political solution, open negotiations with the Taliban and offer a timetable for a phased withdrawal in return for a ceasefire. This should begin with the military pulling out of specific areas in return for Taliban guarantees not to attack western bases and Afghan authorities in those areas. If the Taliban refuses such terms, then military pressure should continue. The point should not be to eliminate the Taliban – which is impossible – but to persuade it to agree to a deal.

Lodhi and Lieven’s argument echoes one that David Axe, Jason Reich, and I made yesterday on ForeignPolicy.com.

… regime change, and democracy, are not necessary for counterterrorism. Propping up President Hamid Karzai’s Western-style government in Kabul does not make operations against al Qaeda any easier or more successful. If anything, it distracts from the conceptually simpler task of finding and killing terrorists. Without U.S. and NATO protection, Karzai’s regime would, sooner or later, probably fall to the Taliban. But U.S. observers should not equate that eventuality with “losing” the war. The war is against terrorists, not Islamist governments. The United States should be prepared to make peace, and amends, with a resurgent Taliban — and to encourage the group to excise its more extreme elements.

I admit talking to the Taliban sounds weird and scary. But my contention is that there is no shortage of Pashtun militants willing to fight against what they perceive to be a foreign occupation of their region. Certainly the Taliban does not enjoy support among the majority of Pashtuns—as Lodhi and Lieven point out—but neither did the IRA in Northern Ireland or the FLN in Algeria. The point is not exclusively about popularity (although that’s a critical component, along with local legitimacy), but the fact that these indigenous groups are willing to fight the United States and NATO indefinitely. Indeed, it is the western military presence that is driving support for the Taliban both in Afghanistan and in Pakistan.

Moreover, the notion that we must protect Pakistan from the Taliban is ludicrous. Pakistan’s intelligence service helped create the Taliban and they continue to protect the Afghan Taliban to keep India at bay. From this point of view, deploying more troops would be irrelevant to the fight against al Qaeda and counterproductive in our attempts to pacify the region. For more on what we should do, check this out.

Exiting the Afghan Quagmire is a post from Cato @ Liberty - Cato Institute Blog

• Should more troops be sent to Afghanistan? Cato’s Malou Innocent weighs in alongside the policymakers.

• What does the end of the missile defense system in Central Europe means for U.S.-Russian relations?

• Signals indicate that the market just might be on the rebound. That’s great,  but it’s important not to get ahead of ourselves, says Johan Norberg.  “We must never forget that the light at the end of the tunnel can be an approaching train.”

• A few thoughts on the new rise of the Taliban in Afghanistan, and what it means for Pakistan and India.

• Michael Cannon continues his debate in the LA Times: The dirty little secret is that “Obama-care” isn’t about reducing health care costs or making coverage more secure. It’s about robbing Peter to pay Paul.

• Podcast: If you’d like to see what Obama wants to do to the U.S. health care system, don’t listen to his rhetoric…look at what he’s doing to Medicare.

Wednesday Links is a post from Cato @ Liberty - Cato Institute Blog

Pakistan long has tottered on the edge of being a failed state:  created amidst a bloody partition from India, suffered under ineffective democratic rule and disastrous military rule, destabilized through military suppression of East Pakistan (now Bangladesh) by dominant West Pakistan, dismembered in a losing war with India, misgoverned by a corrupt and wastrel government, linked to the most extremist Afghan factions during the Soviet occupation, allied with the later Taliban regime, and now destabilized by the war in Afghanistan.  Along the way the regime built nuclear weapons, turned a blind eye to A.Q. Khan’s proliferation market, suppressed democracy, tolerated religious persecution, elected Asif Ali “Mr. Ten Percent” Zardari as president, and wasted billions of dollars in foreign (and especially American) aid.

Still the aid continues to flow.  But even the Obama administration has some concerns about ensuring that history does not repeat itself.  Reports the New York Times:

As the United States prepares to triple its aid package to Pakistan — to a proposed $1.5 billion over the next year — Obama administration officials are debating how much of the assistance should go directly to a government that has been widely accused of corruption, American and Pakistani officials say. A procession of Obama administration economic experts have visited Islamabad, the capital, in recent weeks to try to ensure both that the money will not be wasted by the government and that it will be more effective in winning the good will of a public increasingly hostile to the United States, according to officials involved with the project.

…The overhaul of American assistance, led by the State Department, comes amid increased urgency about an economic crisis that is intensifying social unrest in Pakistan, and about the willingness of the government there to sustain its fight against a raging insurgency in the northwest. It follows an assessment within the Obama administration that the amount of nonmilitary aid to the country in the past few years was inadequate and favored American contractors rather than Pakistani recipients, according to several of the American officials involved.

Rather than pouring more good money after bad, the U.S. should lift tariff barriers on Pakistani goods.  What the Pakistani people need is not more misnamed “foreign aid” funneled through corrupt and inefficient bureaucracies, but jobs.  Trade, not aid, will help create real, productive work, rather than political patronage positions.

Second, Islamabad needs to liberalize its own economy.  As P.T. Bauer presciently first argued decades ago–and as is widely recognized today–the greatest barriers to development in poorer states is internal.  Countries like Pakistan make entrepreneurship, business formation, and job creation well-nigh impossible.  Business success requires political influence.  The result is poverty and, understandably, political and social unrest.  More than a half century experience with foreign “aid” demonstrates that money from abroad at best masks the consequences of underdevelopment.  More often such transfers actually hinder development, by strengthening the very governments and policies which stand in the way of economic growth.

Even military assistance has been misused.  Reported the New York Times two years ago:

After the United States has spent more than $5 billion in a largely failed effort to bolster the Pakistani military effort against Al Qaeda and the Taliban, some American officials now acknowledge that there were too few controls over the money. The strategy to improve the Pakistani military, they said, needs to be completely revamped. In interviews in Islamabad and Washington, Bush administration and military officials said they believed that much of the American money was not making its way to frontline Pakistani units. Money has been diverted to help finance weapons systems designed to counter India, not Al Qaeda or the Taliban, the officials said, adding that the United States has paid tens of millions of dollars in inflated Pakistani reimbursement claims for fuel, ammunition and other costs.

Writing blank checks to regimes like that in Pakistan is counterproductive in the long term.  Extremists pose a threat less because they offer an attractive alternative and more because people are fed up with decades of misrule by the existing authorities.  Alas, U.S. “aid” not only buttresses those authorities, but ties America to them, transferring their unpopularity to Washington.  The administration needs do better than simply toss more money at the same people while hoping that they will do better this time.

Pakistan: More Aid, More Waste, More Fraud? is a post from Cato @ Liberty - Cato Institute Blog

KPMG has released its annual survey of personal income tax rates around the world. The survey covers 86 countries, including all the high-income nations and many middle- and lower-income nations, such as Brazil, China, and India.

The chart shows the top personal income tax rates in 2009 for national governments, per the KPMG study. The current top U.S. rate is 35 percent, which is substantially above the 86-country average of 28.9 percent. The Obama administration plans to let the U.S. rate jump to 39.6 percent in 2011, which would be almost 11 points higher than the international average.

Worse still, the United States has state income taxes with rates up to 10 percent that are piled on top of the federal tax. Some of the nations in the survey (e.g. Canada) also have subnational income taxes, but many, or  most, of them do not.

Finally, note that supporters of government health care expansion have been eyeing further increases in the top U.S. tax rate above 40 percent. Alas, we need more of the Global Tax Revolution to sweep across our shores.

More Evidence on America’s Socialism is a post from Cato @ Liberty - Cato Institute Blog

It’s an annoying, hackneyed trope of foreign policy types to say “if you want to understand X, you have to understand Y.”  That said, let me engage in a little bit of it.

What’s going on in Afghanistan, we’re supposed to believe, is about terrorism, failed states, economic development, counterinsurgency, counterterrorism, human rights, and some other stuff.  And to an extent, it is about each of those things.  But to my mind, if you want to get a handle on what’s driving events over there, and on its historical status as a plaything of regional and extraregional powers, you ought to read this article in today’s Wall Street Journal.

The themes that permeate the article are familiar: States as the primary actors in international politics, their uncertainty about other states’ intentions, the fundamental zero-sumness of security competition…somebody should cook up a theory or two on this stuff.

Eventually–although in fairness, God only knows when–we’re going to leave Afghanistan.  When that happens, India and Pakistan are still going to live in the neighborhood.  They’d each prefer to have lots of influence in Afghanistan, and to preclude the other from having too much.  Accordingly, they’re both trying to set up structures and relationships that would, in the ideal scenario, let them control Afghanistan.  In a less-than-ideal scenario, they’d like enough influence to undermine the other’s control of the country.  Until you grasp that nettle, you’re really just fumbling around in the dark.

Find a solution for that in your COIN manual.

Bringing the States Back In is a post from Cato @ Liberty - Cato Institute Blog

Here in Babylon on the Potomac, most foreign policy discussions begin and end with the United States: How can we extend our control of the world?  Who is challenging us?  What problems might, say, a rising China, pose to American primacy?  We are, as Madeleine Albright asserted, the “indispensable nation.”  One popular scholar recently advanced the theory that the U.S. government is, and should be, the world’s government.  There’s a real refusal to recognize that we are, as a simple matter of fact, isolated by the blessings of geography and power.  We’re just not a 19th century continental European power, no matter how much we threat-inflate and conceive of ourselves as the only source of order in a disorderly world.

You’d think we’d be inclined to recognize the luxury that our isolation affords us, but you’d be wrong.  Consequently, in discussions about the rise of China, for example, U.S. analysts generally pose the question as a simple U.S. vs. China confrontation: How quickly can they challenge us?  Where should our “red lines” be?  Which allies will support us?  If our strategists were smart, they’d be thinking more creatively about offloading responsibility to countries that live more closely to China, and waiting to see how things progress.  While the ChiCom menace tends to get represented as ten feet tall in these discussions, the Chinese have a host of significant problems, including the internal unrest that has been on display recently, among others.

High on the list of “other problems” is China’s relationship with countries like India.  Much more so than the United States, countries like India and Japan have a lot to lose, potentially, from China’s rise.  Liberal international relations thinkers are right to point out the positive-sumness of economic relations between potential adversaries.  Economic ties between China and Taiwan, China and the U.S., China and Japan, are also positive forces that can help to moderate security competition.  That said, security itself is zero-sum.  Either you control your sea lines of communication or else another country does.  If another country does, bad things can happen to you, as, for example, Japan remembers all too well.

All of which is a long-winded way of introducing this excellent article by James Lamont and Amy Kazmin in the Financial Times.  Lamont and Kazmin highlight the growing unease in New Delhi about China.  Unease tends to crop up when a big powerful neighbor does things like claim whole provinces of your country as its own territory, as China does with the Indian province of Arunachal Pradesh.  (For more on this subject, see my talk on Capitol Hill from May 2008: video here.)

In fairness, the Bush administration did some smart things on this front, like trying to improve ties with India.  For years, U.S.-India relations had been tainted by a cold war mindset where we resented their association with the Non-aligned Movement.  (I think the India nuclear deal has a lot of downsides, but the intentions underpinning it were smart ones.)  Similarly, the Bush administration signed a joint agreement with Japan stating that a peaceful resolution of the Taiwan dispute is a “common strategic objective.”

But the important part will be beyond getting other countries to accept our goodies (the India nuclear deal) or sign a statement of interest (the joint Japan-US statement on Taiwan).  Those countries would rather, ceteris paribus, stand tall against China from over the shoulder of the United States.  The only way that we will get to a point where the countries with the most to lose pay the most for a hedge against China is for the United States to credibly commit to do less.  And on that front, there is a lot more work to be done.

Other Countries as Ends-in-Themselves is a post from Cato @ Liberty - Cato Institute Blog

Washington’s willingness to toss security guarantees about the globe like party favors has encouraged other nations to do little for their own defense.  From the European, Japanese, and South Korean standpoint, why spend more when the Americans will take care of you?

But it looks like Australia takes a different view, and is willing to do more to defend itself and its region.  Reports the Daily Telegraph:

The latest defence White Paper recommends buying 100 advanced F-35 jet fighters and 12 powerful submarines equipped with cruise missiles, a capability which no other country in the region is believed to possess.

The “potential instability” caused by the emergence of China and India as major world powers was cited as the most pressing reason for this military build-up. In particular, Australian defence planners are believed to be concerned about China’s growing naval strength and America’s possible retreat as a global power in the decades ahead.

Chinese officials say their country’s growing power threatens no-one. Behind the scenes, Beijing is thought to be unhappy about Australia’s White Paper, with one Chinese academic saying it was “typical of a Western Cold War mentality”.

But the Chinese navy has almost doubled the number of secret, long-distance patrols conducted by its submarines in the past year. The reach of its navy is extending into Australian waters. China is also acquiring new amphibious assault ships that can transport a battalion of troops.

So instead of calling Washington to deal with Beijing, the Australians are building up their own navy.  Novel approach!  Now, how can we implant a bit of the Aussie character in America’s other friends around the globe?

Finally, an Ally That Doesn’t Wait for America is a post from Cato @ Liberty - Cato Institute Blog