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Clinton's Foreign Policy in Somalia, Bosnia, Haiti, and North Korea

by Thomas H. Henriksenvia Analysis
Tuesday, October 1, 1996

Half a decade has elapsed since the collapse of the Soviet Union, and nearly four years have passed since Bill Clinton became president of the United States. These two events, nearly simultaneous in occurrence, present a fitting time for an assessment of specific international policy decisions made by the White House. This juncture is particularly appropriate for an evaluation of President Clinton's handling of prominent foreign policy crises as he seeks a second term.

The Clinton administration has dealt with four high-profile problems- Somalia, Bosnia, Haiti, and North Korea-which demanded presidential attention, resulted in the deployment of U.S. military forces, and generated congressional and public controversy. All were small-scale operations when compared with U.S. involvement in major twentieth-century conflicts. Yet they are significant because the way they were handled may determine the way future large-scale emergencies are managed.

The Clinton administration displayed hesitation, vacillation, and ambivalence in addressing turmoil in Somalia, Bosnia, and Haiti, which carried international ramifications. Somalia emerges as a defining foreign policy decision for the Clinton administration. After suffering a setback in Somalia, the White House moved overcautiously and abdicated leadership in the Bosnian crisis. When Clinton intervened in Bosnia and Haiti, he first narrowed the operational scope, set rigid timetables, put undue restrictions on the missions, and finally emphasized exit strategies. The results of these American efforts, therefore, are likely to be transitory. In the case of North Korea, the White House has been correct to engage the decrepit but dangerous North Korean regime, but the administration's nuclear agreement is difficult to verify and has secured inadequate quid pro quos in return for American, Japanese, and South Korean inducements for cooperation. Most important, the Geneva Agreement set a bad international precedent in the fight against nuclear proliferation.

Whoever wins the national election and takes office as president must reassert America's moral and strategic leadership to bolster U.S. credibility in a world undergoing profound change. The next president must articulate with clarity and conviction for Congress and the public the importance of America's international responsibilities that accompany its power and influence. Among the specific recommendations for the incoming administration in 1997 are the eastward enlargement of the North Atlantic Treaty Organization, the construction of a missile defense system, and an increase in military spending to meet future crises, which are almost certain to be greater challenges than Somalia, Bosnia, Haiti, or North Korea.

Culture Wars in America

by Edward Paul Lazearvia Analysis
Monday, July 1, 1996

Economic necessity forces immigrants and minority members to acquire the culture and speak the language of the majority. A non-English speaker who lives in a community in which many speak the language of his native land may never learn English. The same person might learn English quickly were he or she to find him- or herself in a community where only English is spoken.

Culture wars threaten to diminish America's ability to absorb new immigrants and to benefit from the diversity already present in our country. Much of the conflict is generated by government policy that reduces the incentives to become assimilated and exacerbates differences in the population. Education in one's native language, unbalanced immigration policies that result in large and stable ghettos, welfare availability, and encouragement of a multilingual society by allowing citizens to vote in languages other than English all reduce incentives to become assimilated. This essay explores patterns of cultural assimilation over time and makes policy recommendations that may bring a quicker end to the culture wars.

The Economic Way of Looking at Behavior: The Nobel Lecture

by Gary S. Beckervia Analysis
Monday, July 1, 1996

On October 13, 1992, the Royal Swedish Academy announced the award of the Nobel Prize in economic sciences to Gary S. Becker, a senior fellow at the Hoover Institution and University Professor of Economics and Sociology at the University of Chicago. In announcing the award, Gary was cited for extending "the domain of microeconomic analysis to a wide range of human behavior and interaction, including nonmarket behavior."

In the lecture he delivered as part of the 1992 Nobel Prize award ceremony, Gary discussed four topics—discrimination against minorities, crime and punishment, the development and accumulation of human capital, and the structure of families—that are emblematic of his innovative approach to the economic analysis of social issues. We are pleased to reproduce Gary's Nobel lecture as a Classic in the Hoover Essays in Public Policy series.

John Raisian
Director, Hoover Institution
June 1996

North Korean Economic Reform and Political Stability

by Bruce Bueno de Mesquitavia Analysis
Saturday, June 1, 1996

Using a model with a strong track record of predictive accuracy, we posit the unraveling of Kim Jong-Il's hold over power in North Korea. Our analysis suggests that the North Korean military and leaders of heavy industry in North Korea are pivotal powers who control North Korea's destiny over the next few years. We infer from the evidence that Kim Jong-Il's family and the second generation of leaders are opportunists who are likely to break ranks with Kim Jong-Il to secure their own well-being. The result of their anticipated break with Kim Jong-Il is likely to be a slowing of economic reform and of economic openings to South Korea. North Korea is expected to enter a period of political instability that will render Kim Jong-Il little more than a figurehead. Barring strategic efforts by the partisans and some others with credible leverage, North Korea is unlikely to improve its economy or stabilize its government in the next two or three years.

Taxation and Economic Performance

via Analysis
Wednesday, May 1, 1996

Over the past two centuries, economists have debated whether or not higher rates of taxation lead to increased levels of government revenues. In the eighteenth century, Adam Smith pointed to a reduced level of revenues from substantially higher tariffs and duties on traded goods. In the twentieth century, the Laffer Curve postulated that there would be no government revenue at a taxation level of 100 percent or 0 percent. More recently, the debate focused on the tax increases of 1990 and 1993, which were designed to reduce the federal budget deficit through an increase in government revenues. In fact, the forecasted revenue generation following each tax increase fell short of the mark.

Increases in tax rates have not raised the desired additional revenues, but they have dampened economic activity. Higher tax rates tend to reduce the tax base as taxpayers have disincentives to work, produce, save, or invest. There are, however, incentives to hide, shelter, and underreport income as tax rates are raised. Thus, the economy as a whole tends to perform less well following a tax increase. Conversely, the economy tends to perform more favorably following a reduction in tax rates. In the postwar period, government revenues as a percentage of gross domestic product have averaged 19.5 percent despite marginal income tax rates as high as 92 percent and as low as 28 percent. Despite the historic record, policy makers continue to embrace the notion that an increase in marginal tax rates will raise revenues without any attendant adverse effects on economic growth, job creation, or standard of living.

The Democratic Advantage: The Institutional Sources of State Power in International Competition

by Barry R. Weingastvia Analysis
Friday, March 1, 1996

According to the standard wisdom in international relations, authoritarian states hold an advantage over democratic states because they can act more quickly and decisively. Yet over the last several centuries, every extended rivalry between an authoritarian state and a liberal one has been won by the liberal state: the Dutch revolt against Spain (late sixteenth and early seventeenth centuries); the 125-year rivalry between England and France (1689-1815); the Anglo-French-American rivalry with Germany (late nineteenth through mid-twentieth century); and the American/Allied rivalry with the Soviet Union after World War II.

This paper shows why liberal democracies have a long-term advantage in international competition with authoritarian states. We argue that this reflects the greater ability of liberal states to establish credible limited government. This ability has both long-term advantages for growth and substantial short-term financial advantages during periods of intense international conflict. The financial advantages allow a liberal democracy to raise massive funds through debt, thus financing larger and longer wars. After developing the theoretical perspective, we study two cases, the 125-year rivalry between England and France and the more recent cold war between the United States and the Soviet Union.

Let's Wait for Korea to Decide

via Analysis
Thursday, February 1, 1996

After a brief period of calm in the early 1990s, the United States and Korea are about to enter a new round of trade conflict. Given the importance of bilateral trade to each other's economy and the need for sustained cooperation in the face of North Korea's nuclear program, the United States and Korea must resolve emerging trade disputes over U.S. access to Korean auto, telecommunications, and food markets.

In dealing with Korean trade barriers, however, the United States should avoid a confrontational approach. Under his "globalization" initiative, President Kim Young Sam has placed a priority on deregulation and economic liberalization. Even without U.S. pressure, then, Korea will open its markets for its own good. If the current reforms in Korea do stall, the United States should consider offering a free trade agreement to Korea unilaterally and waiting for Korea to decide. This will give the people of Korea a chance to choose what kind of economy they want to have.

Judicial Reform in Latin America: A Framework for National Development

by William Ratliff, Edgardo Buscagliavia Analysis
Friday, December 1, 1995

Judicial reform is essential in Latin America today if the domestic and international economic changes that have drawn so much worldwide attention are to succeed. Yet heretofore this aspect of reform has usually drawn only passing attention or none at all in the region and beyond. We believe that this indifference cannot continue because law is the underpinning of true democracy and lasting economic reform, both within individual countries and in foreign relations in the emerging world of competition and interaction among nations. We examine this phenomenon from the combined perspectives of law, economics, political science, and history.

First, we describe the problem--the crisis within the judicial system in Latin America today that may itself precipitate changes that would be difficult or impossible to achieve otherwise. We offer new data on perceptions of the current crisis from within the judicial sectors themselves and societies at large. We touch as well on some nonjudicial factors, ranging from institutional inertia to traditional ways of thought and the quality of political leadership, that affect the role of law in society and that in varying ways promote or impede reform.

Second, we discuss judicial reforms needed today to bring justice to all levels of society by enhancing efficiency and reducing and in time eliminating the predatory role of the state, all of which are present or needed in judicial reforms under consideration or being implemented in varying degrees in Latin America. This part analyzes how factors related to the predatory power of the state--such as "rent seeking" (the bribe culture) and other unofficial activities, conducted by different groups within the public sector--increase the institutional inertia observed during judicial reforms. Our proposals take into account both the expected costs and the benefits of judicial reform for the people in general but also for government officials and politicians, considerations that are essential if reforms are to be drawn up realistically and enacted. In doing so we do not think of judicial reform as an entirely consensual matter but often as the playing off of one self-interested group in the government against another that is too weakened by the current crisis to resist effectively. Thus may the door open to long-term positive reform.

Taiwan and the United Nations: Conflict between Domestic Policies and International Objectives

via Analysis
Wednesday, November 1, 1995

For reasons of nationalist sentiment and in hopes that it might help prevent People's Republic of China (PRC) military action, public opinion in Taiwan is strongly in favor of seeking U.N. membership. Responding to this sentiment, both major political parties, the ruling Kuomintang and the opposition Democratic Progressive Party (DPP), eagerly support the idea. But consensus ends there.

To promote its program of ultimate de jure separation from China, the DPP wants to apply as a new member called Taiwan even though it understands that new members can enter only with approval of the Security Council in which the PRC holds a veto. The government wants a General Assembly (GA) study committee formed in hopes that it will recommend amending GA resolution 2758, which expelled the Republic of China (ROC) in 1971.

The Taiwan government's approach is half right: any General Assembly can amend or revoke a resolution adopted by one of its predecessors. But even if a study committee were formed--and two previous assemblies have declined to create one--the PRC would have one of the seats and, because such committees operate on a consensus basis, would be able to block such a recommendation.

Given that there is no court that will decide the matter, the best, indeed only, way to amend resolution 2758 is by direct appeal to the assembly. This can be successful if the ROC can accumulate a working majority of its voting members. The author argues that this can be done by working through the specialized agencies within the U.N. constellation to demonstrate to Third World countries the valuable contributions Taiwan can make to their hopes for development and thus enlist their support.

China's Economic Revolution and Its Implications for Sino-U.S. Relations

by Ramon H. Myersvia Analysis
Wednesday, November 1, 1995

In the next few decades Sino-U.S. relations will be strongly influenced by four issues: economic friction, international security interests, human rights, and conflicting claims by Taipei and Beijing over sovereignty to Taiwan. Economic friction and international security concerns will dominate as China's economic and military prowess grows.

The prospects seem bright for China's economy to become productive and sustain annual growth rates of around 8 percent because in 1992 the Chinese Communist Party decided that the majority of its 150,000 state-owned enterprises would be restructured by the year 2000. This means changing property rights to corporatize the state-owned enterprises and creating a market economy for them to operate in. If China's leaders successfully carry out this revolution, China will not only have a large, prospering middle class but become a major military power.

To anticipate these developments, the United States should now forge a close working relationship with the People's Republic of China by taking the following steps: establish annual summit meetings and a hot-line communication between Sino-U.S. leaders; create a high-level Sino-U.S. committee of officials and experts to manage potential economic friction; expand scholarly exchange programs; encourage local government exchanges. These overarching arrangements will facilitate communications, enhance mutual understanding, build confidence, and reduce tensions between the leaders and political elite of both countries.