Monday, November 29, 2010

ReSTARTing problems for the U.S. and Europe

What is the New Strategic Arms Reduction Treaty (START)? It is pomp and circumstance that restores Russian nostalgia to a day when they were our military equal. Now, they simply aren’t. The new treaty will reduce American and Russian strategic (intercontinental) nuclear weapons from about 2,000 to 1,500, still enough to undoubtedly annihilate an enemy and uphold the principle of Mutually Assured Destruction (MAD).  This new treaty may be blocked during the lame duck session of Congress by Republicans who have voiced concerns over ratification and want to deny the Obama administration a victory. This is a huge mistake for the U.S. and also has negative implications for Europe. 

In an article in Proliferation Analysis by James Acton, Acton mentions that a concern of Republican Senator Jon Kyl over the treaty is the huge stockpile of Russian tactical (battlefield) nuclear weapons and the threat it poses to our European allies. Has anyone bothered to ask the Europeans what they think?

France and the UK both posses a limited but capable nuclear arsenal, serving as a direct deterrent against Russian nuclear aggression in the region. According to the Federation of American Scientists the combined arsenal of France and the UK amounts to around 525 warheads, again enough to obliterate an enemy state.

On a side note, I had the privilege to visit Hiroshima this year for the 65th anniversary of the dropping of the atomic bomb on the city. From visiting museums, the peace ceremony and listening to a survivor I can say with assurance that the devastation that one of these weapons can bring is truly unimaginable.

With their own capable nuclear force, how does Europe benefit from an arms control treaty between Russia and the U.S.? Through increased stable and predictable relations. Ask any European if they are more concerned about Russia using a tactical nuclear weapon against Lithuania or whether Russia can meet European gas demand and the answer will be gas. Russia is known from time to time to shoot itself in the foot with its policies but they have yet to come close to committing suicide. The use of a tactical nuclear weapon on European soil would surely be suicide.

Robert Kagan points out in an article in The Washington Post that the failure to pass START will do nothing but empower Prime Minister Vladimir Putin. As we have seen over the past 10 years a powerful Putin leads to an aggressive Russia. When Russia bullies its neighbors the U.S. suffers by losing ground in its foreign policy goals and Europeans suffer by freezing to death without gas to heat their homes.

While Russia no longer poses a direct military threat to the U.S. and EU it can still cause a major headache when it is ignored (the recognition of Kosovo has led to the continued Russian occupation of Georgia).

Conceding to START obligations, something the outdated Russian nuclear arsenal needs, will give Russia the political room to make a concession that will benefit the U.S. and EU. The U.S. “reset” policy with Russia has proven successful in the past by enabling UN sanctions against Iran, pointed out in both articles. Failure to pass START will end this reset.

Closer ties between the U.S. and Russia will foster a stronger EU-Russia relationship. Kagan also points this out, stating that Russia will demand concessions from Europe if START fails because the U.S. has undermined the Russia-transatlantic relationship and Europe will be the one who must pay to mend the ties.

Putin is still in power because he has vouched to restore Russia to the world power it once was. The arms race between the U.S. and Russia is a treasured Russian claim to international fame. An example: In the past decade the U.S. developed the world’s largest conventional bomb nicknamed the "Mother of All Bombs." This was soon followed by development of a bigger Russian bomb called the "Father of All Bombs." Necessary? I think not.

Russia’s illusion of grandeur is its greatest weakness. Appeasing Russia by acknowledging that it is our military equal, which is all the New START does and in no way makes us less secure, is a small trade off for the possible benefits that both Europe and the U.S. can reap from a stronger relationship.

More pomp and circumstance summits and treaties like START that play to Russia’s vanity are needed. Letting Russia believe it is on par/winning the arms race with the U.S. will benefit both countries and all in between.  Foreign relations have always been tit for tat and giving Russia back its sense of military prowess is something the U.S. can easily concede. How long will Russia repay the West with a tat? Who knows? But this is no reason to abandon the reset policy.

Unfortunately, the recent shelling of South Korea by the North is another nail in the coffin of the New START. It gives Republicans another excuse to delay ratification because of the nuclear threat in the Yellow Sea. Unlike Russia, the North Koreans seem willing to play Russian roulette. 

Tuesday, November 23, 2010

How to spot an American at the airport

I want to weigh in, briefly, on the controversy of “enhanced” pat downs and body scanners at American airports. Over the past week this has consumed 24-hour news channels; it seems almost every person who flew in the past week has been interviewed. I thought I’d contribute to the media hysteria and post regarding my personal experiences.

When I lived in Europe the sure fire way to identify a fellow American at the airport was to look for the people taking their shoes off. Taking your shoes off to go through airport security is not required at European airports. Personally, I have never had an unpleasant experience flying anywhere, but I have found differences in the attitudes of security officials and one experience in Europe particularly stands out.

When I entered the Schengen Zone for the first time through Zurich and made my way through security as I changed terminals, I made the mistake of taking my shoes off and was quickly informed that this was not necessary. As I walked through the metal detectors I was selected for a pat down. The security official approached me and asked “Deutshe or English?” When I replied, “English” he said “congratulations, you’ve been selected.” I was taken to a booth with a curtain where we both joked about the pat down.  This was not an enhanced pat down that the TSA now performs in the U.S.

Next, I made my way to passport control. Here I was asked if my grandfather was Swiss because of my last name and had a brief chat about my heritage. The official then told me I was going to enjoy Florence and to have a nice trip. Both of these experiences lightened my mood and made my travel experience on that long day very pleasant.

All TSA agents are not grumpy and are just regular people trying to do their jobs. Also, I’ve had my fair share of unpleasant European officials, but a lesson can be taken from my experience in Switzerland.

I am not familiar with TSA training, but my intuition tells me that interpersonal skills are not the focus. This training leads to a guilty until proven innocent attitude and this is what needs to be reversed. This attitude compounds the stress of an already stressful process that many people are not used to.  Travelers should not feel like they are under arrest when they are going through airport security.

It is a difficult counterfactual experiment to estimate how many terrorist attacks would have occurred without increased security measures. The TSA can stop attacks through both prevention and deterrence. I am not opposed to these increased measures, but sympathize with people’s frustration. Some people are recommending profiling, as is practice in Israel, and this would be wrong. We do our best in the U.S. to build a free, secure and equal society and profiling would be a step backwards.

TSA officials, for the most part, are dealing with people, not terrorists. Their training should focus equally on this fact with security. More “how are you todays” and “enjoy your trips” can go a long way. I think we’d be amazed at how willingly people cooperate when asked politely and feel it is their choice rather than compulsory. The solution is simple: remind the public that security often has a price that is freedom and do it with a smile on your face. 

Monday, November 15, 2010

What do the Common Agricultural Policy, National Security, and Renewable Energy Policy have in common?

In a recent poll, The Economist recently posed the question “should tariffs and subsidies for biofuels be ended?” The vote was overwhelmingly “yes.” Biofuels are subsidized and protected by tariffs in the U.S. and, which The Economist fails to bring up, are also propped up by policy in the EU. First generation biofuels are the most controversial of renewable energy sources (RES) because food crops are used to produce fuels like biodiesel and ethanol. Second generation biofuels use non-food crops, such as corn stalks, and third generation use algae that secrete a fuel; both of these technologies are presently not viable.

Moving away from biofuels specifically and looking at RES policy as a whole, policy has developed along a significantly different track in the U.S. than in the EU. The EU has passed comprehensive climate change legislation known as the 20/20/20 directives. These three directives set EU wide goals of 20 percent of energy consumption to come from RES, a 20 percent increase in energy efficiency, and a 20 percent reduction in carbon emissions.  A binding quota (or goal such as Malta’s 10 percent) is outlined in the RES directive for each member state that takes into account current RES infrastructure and other economic factors. Individual state quotas were the result of much compromise; originally the directive compelled all member states (MS) to reach 20 percent.  
The reduction in carbon emissions will be met through a cap-and-trade scheme. Licenses that permit carbon emissions were originally issued by the MS, but recently this has become supranational competency.

How member states reach their RES quotas by 2020 is up to them. Some member states have adopted renewable portfolio standards (RPS) (discussed next), but the biggest success story has been the feed-in tariff, a German policy innovation. Under a feed-in tariff system RES producers are guaranteed a premium price on electricity based on the mode of production; solar receives the highest premium because of its high cost. Producers are guaranteed this price for a pre-established amount of time which encourages small entrepreneurs to invest in RES. Electricity transmission operators, who buy electricity from production facilities and transmit it to consumers are required to buy all RES electricity. Many other MS have followed the German example and adopted a feed-in tariff system, such as Spain, and all MS are currently on track to meet their RES quotas.

No federal RES or climate change legislation has been passed in the U.S.

But..

More than half of U.S. states have adopted RPS, alternative portfolio standards (AEPS) or renewable/alternative goals. RPS schemes are the most common. Alternative refers to an expansion of the allowed energy sources that are included in the portfolio, and goals are voluntary. Under RPS/AEPS schemes states compel electricity suppliers to buy a certain amount of electricity produced from RES or alternative sources.  California has the most ambitious portfolio aiming to consume 33 percent of electricity from RES by 2020. Information on all 50 states can be found here.

Which policy has been more successful? EU states that have adopted feed-in tariffs rather than RPS have proved the most successful in promoting RES, in particular Germany and Spain. Feed-in tariffs encourage entrepreneurs to invest in RES, while RPS favor incumbent energy companies and the academic literature shows that feed-in tariffs are much more successful in RES uptake.

Since feed-in tariffs have proven their merit, is this the way toward a RES powered future? Feed-in tariffs have a lot in common with the EU’s Common Agricultural Policy (CAP). CAP has the reputation as being the world’s most inefficient agricultural policy; it is much larger than the U.S.’s farm bill and the second largest item on the EU’s budget. But what is often forgotten is what CAP achieved. CAP helped transform a continent that was incapable at feeding its population, into a continent that now produces agricultural surplus. A simple way of saying this is that CAP provided Europe with food security.
Food security has a lot in common with national security. Both are a pure public good which means they are non-excludable and non-rivalrous.  It is nearly impossible to exclude a citizen from the benefit that the good yields, and if one citizen consumes the good, it does not reduce the benefit from the good another citizen receives. The most commonly used example is air quality. Public goods have always been a problem in economics and it is pertinent to remember this economics basic when developing RES policy.

Increased RES will provide a public good to the U.S. and EU through increased energy security and reduced air pollution, leaving out the hotly debated climate change argument. While feed-in tariffs could, in theory, achieve 100 percent energy production from RES, the downfalls of CAP must also be looked at.
CAP has created a system of concentrated benefits and diffuse costs causing the farm lobby to become the most powerful interest representation group in Europe. Because feed-in tariffs establish a like system by guaranteeing profits for a certain period of time, rent-seeking will occur. The RES lobby could potentially rival the farm lobby in the near future under such a system. RPS on the other hand attempts to use a “market” solution, but have so far been ineffective, especially in encouraging investment from outside the big energy companies.

So what policy should be adopted? Neither. What is needed is an effective way to price carbon and other pollutants and green house gases (GHG) because they are “public bads.” Whether you agree with climate change or not, carbon, and GHG produce a public bad. RES produces a public good, through energy independence, something the EU and the U.S. should strive for. Public goods need to be protected while public bads need to be punished through public policy. The most effective way to do this would be to tax public bads, like carbon, which would effectively establish a price. This price should be proportional to the public bad it produces and because carbon and GHG are global public bads, international solidarity on the price is needed.

The U.S. should be a strong proponent of establishing a global price on carbon; our export mix has been consistently moving away from heavy industries that produce more carbon. The EU on the other hand, who is the world leader in RES and climate change legislation and sought international solidarity at the Copenhagen Summit, would be hurt more than the U.S. if a price were put on carbon because their export mix is heavier.

Many Americans have been fine with 20 percent of the budget going towards supporting the public good of national security, although this now may change. Why not agree on a price for carbon and GHGs to increase the competitiveness of RES that will in turn increase energy security? Countries that do not adopt the price can be punished through raising a tariff equal to the price of carbon on their goods. Establishing this price will without a doubt be difficult and I do not have the answer. But it is not impossible. Pricing public goods and bads is difficult but necessary because it is something the market does not provide.

Without effective prices, public goods will deteriorate while bads are produced at no cost. This is: Why it is illegal to pollute water sources, the cause of fishery policy, and the reason for clean air legislation. It is time that energy security and self reliance is taken seriously and promoted through an effective, federal, and eventually international (so no country achieves an advantage because of no carbon tax), policy that prices this public bad. If the U.S. and the EU could agree on such a policy the rest of the world would follow suit.

Tuesday, November 2, 2010

Punishing Obama: Second-order theory and similarities between EP and American midterm elections

Today, Americans go out to vote in the midterm elections (all 435 House and 37 Senate seats up for grabs halfway through President Obama’s tenure). Most political outlets are predicting that Republicans will take control of the House, and possibly even the Senate. The key word here being possible because everyone is attempting to predict the election, but it will all come down to how many people actually go out and vote.

European Parliament (EP) elections are the subject of much controversy in Europe. The EP is the only directly elected institution and elections are plagued by low voter turnout. It is important to remember that the electoral system used by the EU is proportional rather than single member district like in the U.S. In a proportional system voters select a party on a ballot rather than a person. That party then receives an amount of seats in the parliament proportional to the number of votes they receive. A threshold of votes must be reached for a party to receive seats, eliminating the possibility of parties with less than 1 percent of the vote from entering government. This system favors the entrance of smaller parties into government, while single member district systems traditionally produce a two party government.

Simon Hix and Michael Marsh sum up existing research on EP elections and come to insightful conclusions in their article “Punishment or Protest? Understanding European Parliament Elections.” Hix and Marsh conclude that a minor proportion of voters cast their ballot in protest against the integration project and find that most voters are subject to the “honeymoon effect.” The honeymoon effect affects elections by causing voters to reward a ruling party shortly after national elections by casting their ballot for that party in EP elections. If the honeymoon is over with the national government and the public is unhappy with the ruling party, they will punish this party during EP elections by casting their ballot for different parties. Along with timing (the honeymoon effect), second order theory states that the governing and the largest parties will lose seats during second-order contests.[i]

Research has shown that second-order theory largely holds true for EP elections; can any of these principles be applied to American midterms? It appears that the three principles of second-order theory are having a large impact on today’s elections. The honeymoon with President Obama is over halfway through his term. The Democrats have held power in Congress since 2006 and are therefore the largest party in government. With unemployment close to 10 percent the public is looking for new solutions to solving the Great Recession.

Disdain with Democratic handling of the recession has given birth to the anti-government Tea Party movement. As I compiled sources on the Tea Party, which I originally was going to post about, I became confused about exactly what they stand for and the funding of the movement has come under increased scrutiny. Rather than discuss that here, it is best to wait and see how many Tea Party candidates succeed in getting elected to public office. Fringe parties, similar to the Tea Party, fare better in EP elections as voters have the “luxury of supporting smaller parties that may seem irrelevant in a national election where government formation was a salient issue.”[ii] In the midterms, a presidential election is not at stake, and is not the salient issue, so voters have the luxury of supporting movements like the Tea Party. 

Midterm predictions all point toward results that hold true to second-order theory. Republican takeover of the House and the Senate will be a clear indication that the public is unhappy with President Obama and is punishing his administration by voting against Democrats. It is currently debated whether this will lead to gridlock or increase compromise between the two parties. 

I can only hope, that if this happens, we take a lesson from our neighbors across the Atlantic and choose compromise.


[i] Hix, Simon and Michael Marsh. 2007. “Punishment or Protest? Understanding European Parliament Elections.” The Journal of Politics: Vol. 69 No. 2 pp. 496.
[ii]Ibid, 506.