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Vol. 27, No. 6

Ithaca / Tompkins County

June 2013

China Today: Reading the Chinese Press......... 6

The 2nd Amendment as a 1st Principle Edward Erler Reprinted from Imprimis

Canada’s Success at Fiscal Reform Chris Edwards Reprinted from Cato Journal Two decades ago Canada suffered a deep recession and teetered on the brink of a debt crisis caused by rising government spending. The Wall Street Journal said that growing debt was making Canada an “honorary member of the third world” with the “northern peso” as its currency. However, Canada reversed course and cut government spending, balanced its budget, and enacted pro-market reforms. It reduced trade barriers, privatized businesses, and slashed its corporate tax rate. The economy boomed, unemployment plunged, and the formerly weak Canadian dollar soared to reach parity with the U.S. dollar. The Canadian reforms were hugely successful. Today, the United States is in as bad or worse fiscal shape than Canada was in. U.S. leaders need to make major fiscal and economic reforms, and they can learn many lessons from Canadian efforts to restrain government and create a more competitive economy. Canada has a long history of stable government and general prosperity. Like the United States, it enjoyed a relatively limited government before the mid-20th century. Early Canadian leaders leaned toward classical liberal beliefs, and they tried to keep taxes at least as low as U.S. taxes in order to attract immigrants and investment. In The Canadian Century, Brian Lee Crowley, Jason Clemens, and Niels Veldhuis

(2010) discuss how Wilfred Laurier—prime minister from 1896 to 1911—was a strong supporter of spending restraint, low taxes, free trade, and civil liberties. Laurier was one of the country’s greatest leaders, and he envisioned Canada as a decentralized federation that supported individual liberty. That sounds like the vision of America’s Founders. That vision, of course, faced major setbacks in both countries in the 20th century. In some cases Canada resisted the rising tide of big government longer than the United States. The United States was the first to establish a central bank, an income tax, a capital gains tax, and a number of social welfare programs. Until the 1960s, government spending relative to the size of the economy was about the same in the two countries. Unfortunately, Canada veered sharply left in the late 1960s, beginning a 16-year spending binge and expansion of the welfare state. The Canadian leader during most of that time was Pierre Trudeau, who was a brilliant man but favored left-wing economic policies. He expanded programs, raised taxes, nationalized businesses, and imposed barriers to international investment. Canada also suffered from high inflation during the 1970s and early 1980s. Trudeau’s socialist grip on public policy continued on page 8

We are currently mired in a frantic debate about the rights of gun owners. One example should suffice to prove that the debate has become hysterical: Second Amendment supporters, one prominent but less than articulate member of Congress alleges, have become “enablers of mass murder.” Special animus has been directed against so-called assault rifles. These are semi-automatic, not automatic weapons— the latter have been illegal under federal law since the 1930s—because they require a trigger pull for every round fired. Some semi-automatic firearms, to be sure, can be fitted with large-capacity magazines. But what inspires the ire of gun control advocates seems to be their menacing look—somehow they don’t appear fit for polite society. No law-abiding citizen could possibly need such a weapon, we are told—after all, how many rounds from a high-powered rifle are needed to kill a deer? And we are assured that these weapons are not well-adapted for

self-defense—that only the military and the police need to have them. Now it’s undeniable, Senator Dianne Feinstein to the contrary notwithstanding, that semi-automatic weapons such as the AR-15 are extremely well-adapted for home defense—especially against a crime that is becoming more and more popular among criminals, the home invasion. Over the past two decades, gun ownership has increased dramatically at the same time that crime rates have decreased. Combine this with the fact that most gun crimes are committed with stolen or illegally obtained weapons, and the formula to decrease crime is clear: Increase the number of responsible gun owners and prosecute to the greatest extent possible under the law those who commit gun-related crimes or possess weapons illegally. Consider also that assault rifles are rarely used by criminals, because they are neither easily portable nor easily concealed. continued on page 4

Our Responsibilities as a Superpower Walter Lohman A speech given at Lewis & Clark College This panel’s title—“Tidal Shift: Promoting Military Retrenchment or Escalation”—presents a false dichotomy. Retrenchment and escalation are not our only choices. The other choice, and the case I am prepared to make, is for continued American leadership in the service of our global responsibilities. American troops, planes, and ships stationed abroad, and occasional armed intervention, sometimes war, are necessary parts of what enables our leadership. But they are not the main thing. American leadership has brought about the most peaceful, prosperous, and free world in the history of mankind. This is the main thing. This vision of a better world is the principal source of American power. Our military and economic strength abroad are only strengths to the extent that they serve it. Retrenchment—by contrast—is a narrow, selfish view of American power that says, “I’ll take care of my own, you take care of yours.” Some of our friends abroad may think that way. But the world can’t afford America following suit. Americans have a responsibility to be bigger people than that. Because as Franklin

Roosevelt wrote about American leadership: “Great power involves great responsibility.” Imagine if, in the 1930s, the U.S. had a military presence in Asia that prevented Japan from invading China. We would have avoided the massive human tragedy of the Pacific war—a war where American men and women died in the tens of thousands on islands they had never heard of before. In 2013, we do have a military presence in the Pacific that prevents China from even contemplating an invasion of Japan or, more to the point, of Taiwan. We have a Navy in the Pacific capable of protecting the seas and maintaining the peace so that small conflicts don’t become big wars. I’m for maintaining these capacities to keep the peace. I’ve been to China multiple times. I went the first time in 1995. I’m going again in a few weeks. What is going on in China is not simple. China is absolutely not destined to be our enemy. China is also, however, not destined to be our friend. Even so, we have maintained a policy of engagement with China for 40 years. That’s a good thing. I want the U.S. continued on page 9


Can These Two Dreams Coexist? Marco Rubio Reprinted from Foreign Policy Magazine [This article was written prior to the June 8 meeting between President Obama and President Xi.] Indeed, so much anticipation has been built up about interactions between U.S. and Chinese officials that we often overlook the fundamental point about America’s relationship with China: What is at stake in what some call the most important relationship of the century is nothing less than the type of world we will leave to our children and grandchildren. This will be determined by the outcome of two dreams. One is the American Dream that for decades has served as an example to the rest of the world of what is possible for Americans of all classes, if they work hard to succee and rise above the circumstances of their birth. That dream is increasingly out of reach for many, as the opportunities once afforded to every American no longer can be taken for granted. Many feel the system is now stacked against them. The other dream is the so-called Chinese Dream that President Xi has spoken about frequently since assuming power earlier this year. This dream holds that China is destined to become a great power, and that meeting the Chinese people’s “desire for a happy life” is the mission of China’s rulers. Although Xi’s dream has echoes of the American Dream, these two visions are very different and ultimately incompatible if China desires to become a “responsible stakeholder” in the international system. Which dream succeeds in the coming decades will have profound implications, not just for the United States and China, but for the world. That’s because for almost seven decades, the United States has served as the primary guarantor of peace and stability in the world. It has built alliances, helped establish international institutions, protected the internationa sea lanes on which commerce flows and helped spread freedom and prosperity. In times of crisis, America has provided leadership and, when necessary, the lives of its citizens to advance its ideals and defend its security. That is now all in question because of the last four and a half years of the Obama administration’s foreign policy. Our allies are often left looking for leadership. Our military staying power is being undermined by the president’ arbitrary defense cuts. And when crises arise, from Asia to the Middle East, both our enemies and our allies are often left searching for clarity on America’s position. Too often, they come up empty. As this perception of American retreat grows, Chinese leaders are presenting an image of the Chinese Dream tha is not realistic to its people or to its neighbors. China has been experiencing impressive economic growth, by copying parts of the American economic model and enjoying the stability afforded by U.S. power. Many of its citizens have been able to enjoy the fruits of that progress. However, hundreds of millions still have not, a challenge

that President Xi will need to face as he tries to adapt the Chinese economic model of managed capitalism quickly enough to respond to these pressures. The clamor among the public for serious change is only growing—and the limited reforms that the party leadership has been willing to parcel out will not be sufficient for long. Beyond these questions about the sustainability of China’s economic model, the China Dream is unappealing to the rest of the world because of other factors. This week marked the 24th anniversary of the brutal crackdown on pro-democracy activists, many of them students, in Tiananmen Square. The fact that nearly a quarter century after this tragedy, the Chinese authorities still go to great lengths to isolate dissidents on the anniversary and block searches online for commentary and photos from those events shows the fragility of the Chinese Dream. Despite its rapidly modernizing economy, China is a country where freedom of speech and assembly do not exist. Churches are routinely raided and shut down. Forced sterilizations and abortions are common. Political persecution, including detention without trial and violations of fundamental human rights, are the norm. No nation that conducts such acts can guarantee the happiness of its citizens. What leaders in Beijing often forget is that how a country treats its citizens often portends how it will treat its neighbors. And China’s neighbors will increasingly view its rise with suspicion and dread as long as these policie continue, regardless of its economic power. They are not clamoring for the China Dream, but are instead worried that their American Dream, of a beneficent ally, may be waning. Despite this bleak picture, America can return to the right course, get our economy in order, and resume the global leadership required to ensure that the rise of China and other powers occurs peacefully. The first step should be for President Obama to speak frankly with President Xi about the areas where Washington and Beijing disagree. Far too often, across multiple administrations of both political parties, U.S. leaders have sought to play down irritants in the relationship in an effort to avoid controversy. The U.S.-China relationship is important enough that this is no longer feasible. The administration needs to build on its first term “pivot” to Asia by quantifying what this policy will mean in a age of shrinking U.S. military resources. Washington needs to send the message to both its allies—as well as Beijing—that

the United States will remain a Pacific power and that it is willing to make the military and economic commitments to do so, including through efforts such as the Trans-Pacific Partnership. Currently, the administration’s commitment is being questioned in the region. Key to reversing this perception is ensuring that U.S. treaty commitments are reaffirmed—including with Japan, which faces pressure from China over the Senkaku Islands. We also need to reaffirm our commitment to stand with our democratic allies in Taiwan as they face a growing military challenge from the mainland. Finally, and perhaps most importantly, the president needs to put America’s democratic principles front and center in discussions with China. This is important because it is perhaps the greatest difference between the two dreams. America was founded on the notion that every human being has the God-given right to be free. In his discussions with Xi in Sunnydale this weekend, Obama should highlight specific cases, including that of Nobel Prize winner Liu Xiaobo, and make the point that Beijing cannot continue to shock the conscience of humanity with its violations of fundamental human rights and its policies toward Tibetans and other minority ethnic groups. This interaction should be the beginning of a sustained U.S. effort to raise these issues at all levels with Beijing. U.S.-Chinese conflict on these and other important global issues is not preordained. But it will become increasingly likely if U.S. officials continue to focus on atmospherics and fail to tackle the tough issues that divid the two countries. Measurable progress from Beijing on issues such as China’s treatment of its citizens and neighbors, on the nuclear programs of North Korea and Iran, on cybersecurity, and on its respect for a rules-based trading system is the best way to begin to improve U.S.-China relations. Meanwhile, back at home, we need to shore up the American Dream. We need to ensure that our children once again have the opportunity to follow the paths of our parents to a better life. We need to restore optimism and hope in our citizenry about America’s role in the world. If America does these things, we will be well on the way to ensuring that the twenty-first century, just like the on that preceded it, is an American Century—and that the American Dream continues to be what people everywhere aspire to, for decades to come. n Reprinted from Foreign Policy magazine, June 7, 2013. http://www. are?print=yes&hidecomments=yes&page=full

A Monthly Review of People, Issues & Events

353 Main Street, Freeville, New York 13068 (607) 347-4393 • Publisher and Editor................................................JAMES CRAWFORD Managing Editor.....................................................NANCY CRAWFORD Technical Assistance........................................................STEPHEN COBB Production................................................................. MARY CRAWFORD Distribution........................................................................BOB GESSNER The Herald Examiner is published as a forum for thought-provoking and constructive ideas. This publication is dedicated to the original mission of journalism—the pursuit of truth for the benefit of the whole community. Single copies are free. Multiple copies are available for $1 per copy. Opinions presented do not necessarily represent those of the advertisers, or persons listed as staff. Readers are invited to write. Letters will be printed, subject to editorial review, and may be edited for length and clarity. The Herald Examiner is available by subscription, and can be mailed anywhere in the U.S. for a donation of $25 per year.

Volume 27, No.6

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June 12, 2013

The Herald Examiner

The Ups and Downs of Reverse Mortgages Pamela Villarreal Reprinted from the National Center for Policy Analysis Television advertisements make reverse mortgages sound appealing. Some ads make misleading statements such as a borrower “will never lose your home,” or that a reverse mortgage is a “government benefit,” but there are several untoward things that can happen if borrowers do not fully understand the terms. Furthermore, because the Federal Housing Administration (FHA) insures reverse mortgages, future taxpayers could be on the hook for billions of dollars. How A Reverse Mortgage Works. Reverse mortgages allow homeowners age 62 or older to borrow against their home equity and receive the money in the form of a steady stream of income (annuity), a lump sum payment or a line of credit they can draw on. Reverse mortgages differ from home equity loans in that repayment of the loan is not due until the loan recipients die or move out of the home. As long as the borrowers continue to live in the home, they can receive payments until death.  Once the borrowers die, however, the loan must be paid back either through the sale of the home or with other funds from the borrower’s estate. If the loan amount exceeds the value of the home when the loan comes due, the house becomes the property of the lender. If proceeds from the sale of the home are insufficient to pay the outstanding loan balance, lenders can file an insurance claim with the FHA. How Much Money Can a Reverse Mortgage Provide?  The amount that a borrower can obtain through a reverse mortgage is based on two main criteria:  the amount of equity in the borrower’s home and the borrowers’ age. Thus: A single individual must be at least 62 years old in order to apply for a reverse mortgage; for a married couple, both spouses must be 62 years of age. The older the borrower, the more home equity he can access. For instance, a 62-year old borrower may only receive about 40 percent of his home’s equity, whereas a 72-year old borrower could access about 60 percent of home equity. The loan is not without cost. Like a conventional mortgage, reverse mortgages accrue interest, but the interest is not due until an event occurs that triggers repayment. Lenders also charge up-front fees, which include: Mortgage insurance, which is charged as both an up-front fee ranging from 0.02 percent to 2 percent (depending on the specific loan terms) and an annual charge equal to 1.25 percent of the loan balance. An origination fee based on the loan amount, but not more than $6,000. Miscellaneous service fees. Lenders subtract these fees from the lump-sum or monthly payments the borrower receives. Types of Loans Available. Mortgage companies have offered different types of loans, similar to conventional mortgages, including a fixed-rate (known as the Standard Fixed Rate HECM), a lower-cost, fixed-rate mortgage (the “Saver” plan) and a variable-rate mortgage. However, this year the FHA eliminated Standard Fixed Rate HECMs, which have higher upfront fees and more generous loan amounts.  Instead, the FHA now only allows “Saver” plans for fixed-rate mortgages, which charge lower fees but offer 10 percent to 20 percent less payout than standard mortgages. Reverse mortgages can generally be used to pay off an existing conventional mortgage if the balance owed does not exceed the amount of the reverse mortgage. Demographics of Reverse Mortgagees. Although reverse mortgages are limited to seniors, borrowers are applying at earlier ages. According to a Met Life survey, the average borrower is 71.5 years old, but one in five borrowers are ages 62 to 64. Moreover, two-thirds of borrowers are using reverse mortgages to pay down debt (including conventional mortgage debt), while only 27 percent use the mortgages to enhance their lifestyle. Younger borrowers are far more likely to have mortgage debt than older borrowers, with or without other types of debt. Some 70 percent of borrowers under age 70 had mortgage debt, with or without other debts. Only 16 percent of borrowers under age 70 had no debt at all. About 62 percent of borrowers age 70 and over had mortgage debt, and only 25 percent had no debt at all. The survey also found that about one-third of homeowners using reverse mortgages have a mortgage balance that is at June 2013

least half of their home value. This troubling trend will increase as more baby boomers enter retirement with mortgage debt than previous generations. The Downside to Reverse Mortgages. Reverse mortgages can be considered in default if the homeowner fails to pay annual property taxes and homeowner’s insurance or maintain the property. In the event of default, the lender ceases monthly payments to the borrower and may foreclose on the property. Other circumstances might take borrowers completely by surprise if they do not understand the terms of their agreement, potentially losing their home. For instance: If only one spouse’s name is on the house deed, the reverse mortgage could become due and payable upon the death of that spouse. If the surviving spouse cannot pay the loan debt, the lender can foreclose on the property. If the total payments from the reverse mortgage loan exceed the home’s current value,—for example, if the home’s value falls over time—the borrower is not liable for the difference; however, this may not always be the case with non-FHA guaranteed loans. Lenders who help borrowers obtain reverse mortgages are required to inform them orally of their rights and responsibilities. However, a Government Accountability Office audit of 15 lenders found that none of them covered all of the required topics: Seven of the 15 lenders did not provide information about less-complicated financial options than a reverse mortgage. Fourteen of the 15 lenders only partially met the disclosure requirements—principally, disclosing information about the financial implications of a reverse mortgage—and the same lenders did not tell borrowers the borrowers could opt to have the lender withhold funds in an escrow account to pay insurance and property taxes. Fourteen of the 15 lenders failed to ask the homeowners if they had signed a contract or agreement with an estate planning service, a question that is required by the FHA. The Risk to Taxpayers. The FHA regulates reverse mortgages, and the rules have changed over time. In particular,

the Housing and Economic Recovery Act of 2008 (HERA) capped the origination fee lenders could charge borrowers, which led to fewer lenders offering reverse mortgages. On the other hand, HERA also increased the maximum loan amount to $417,000, surpassing the previous limits based on home values in the county where the house is located, which were often much lower. The American Recovery and Reinvestment Act again increased the limit in 2009 to $625,000 thus giving more lenders an incentive to offer reverse mortgages. These changes appeared to reinvigorate the reverse mortgage market: The largest number of reverse mortgages were issued in 2007 to 2009, with an average loan amount of $157,000 in 2007 and $150,000 in 2008. The issuance of new reverse mortgages rose to more than 114,000 in 2009, and the average loan amount peaked at $194,425. By 2011, the number of new reverse mortgages issued fell to 57,774—the lowest level since 2005—likely due to declining home values after the housing bubble burst. The FHA insures reverse mortgages, which provides lenders with a strong incentive to issue them, because they can claim compensation in the event of a default. But this government support means that taxpayers could foot the bill for any number of defaulted mortgages: The FHA’s 2012 financial statement reveals about $140 billion in outstanding FHA-insured reverse mortgage loans. The federal Consumer Financial Protection Bureau reported in 2012 that, about 9.4 percent of reverse mortgages were at risk of default—nearly double the default risk for ordinary home mortgages (about 5 percent). The Government Accountability Office reported that projected defaults in 2010 would alone require a taxpayer subsidy of $789 million. With a much higher default rate than traditional mortgages, reverse mortgages and their inherent risks should be left up to the market, not the Federal Housing Administration. If lenders cannot and will not bear the risk, the reverse mortgage market should not exist in the first place. n Used with permission of the National Center for Policy Analysis. http://

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In Chicago, the murder capital of America—a city with draconian gun laws—pistols are the weapon of choice, even for gang-related executions. But of course there are the horrible exceptions—the mass shootings in recent years—and certainly we must keep assault weapons with high-capacity magazines out of the hands of people who are prone to commit such atrocities. The shooters in Arizona, Colorado, and Newtown were mentally ill persons who, by all accounts, should have been incarcerated. Even the Los Angeles Times admits that “there is a connection between mental illness and mass murder.” But the same progressives who advocate gun control also oppose the involuntary incarceration of mentally ill people who, in the case of these mass shootings, posed obvious dangers to society before they committed their horrendous acts of violence. From the point of view of the progressives who oppose involuntary incarceration of the mentally ill—you can thank the ACLU and like-minded organizations—it is better to disarm the entire population, and deprive them of their constitutional freedoms, than to incarcerate a few mentally

The Second Amendment is unique among the amendments in the Bill of Rights, in that it contains a preface explaining the reason for the right protected: Militias are necessary for the security of a free state. We cannot read the words “free State” here as a reference to the several states that make up the Union. The frequent use of the phrase “free State” in the founding era makes it abundantly clear that it means a non-tyrannical or non-despotic state. Justice Antonin Scalia, writing for the majority in the case of District of Columbia v. Heller (2008), rightly remarked that the term and its “close variations” were “terms of art in 18th-century political discourse, meaning a free country or free polity.” The principal constitutional debate leading up to the Heller decision was about whether the right to “keep and bear arms” was an individual right or a collective right conditioned upon service in the militia. As a general matter, of course, the idea of collective rights was unknown to the Framers of the Constitution—and this consideration alone should have been decisive. We have James Madison’s own testimony that the provisions of the Bill of Rights “relate [first] . . . to private rights.” The notion of collective rights is wholly the invenhis is the real origin of the gun control hysteria— tion of the Progresthat professional police forces and the military have sive founders of the rendered the armed citizen superfluous; that no administrative state, who were engaged individual should be responsible for the defense of in a self-conscious himself and his family, but should leave it to the experts. effort to supplant the principles of limited government embodied in the Constiill persons who are prone to engage in violent crimes. tution. For these Progressives, what Madison and other And we must be clear—the Second Amendment is Founders called the “rights of human nature” were merely a not about assault weapons, hunting, or sport shooting. It is delusion characteristic of the 18th century. Science, they held, about something more fundamental. It reaches to the heart has proven that there is no permanent human nature—that of constitutional principles—it reaches to first principles. there are only evolving social conditions. As a result, they A favorite refrain of thoughtful political writers during regarded what the Founders called the “rights of human America’s founding era held that a frequent recurrence to nature” as an enemy of collective welfare, which should first principles was an indispensable means of preserving always take precedence over the rights of individuals. For free government—and so it is. Progressives then and now, the welfare of the people—not The Second Amendment reads as follows: “A well reguliberty—is the primary object of government, and government lated Militia, being necessary to the security of a free State, should always be in the hands of experts. This is the real the right of the people to keep and bear Arms, shall not be origin of today’s gun control hysteria—the idea that profesinfringed.” The immediate impetus for the amendment has sional police forces and the military have rendered the armed never been in dispute. Many of the revolutionary generation citizen superfluous; that no individual should be responsible believed standing armies were dangerous to liberty. Militias for the defense of himself and his family, but should leave it made up of citizen-soldiers, they reasoned, were more suitto the experts. The idea of individual responsibilities, along able to the character of republican government. Expressing with that of individual rights, is in fact incompatible with a widely held view, Elbridge Gerry remarked in the debate the Progressive vision of the common welfare. over the first militia bill in 1789 that “whenever Govern This way of thinking was wholly alien to America’s ments mean to invade the rights and liberties of the people, founding generation, for whom government existed for the they always attempt to destroy the militia.” purpose of securing individual rights. And it was always


understood that a necessary component of every such right was a correspondent responsibility. Madison frequently stated that all “just and free government” is derived from social compact—the idea embodied in the Declaration of Independence, which notes that the “just powers” of government are derived “from the consent of the governed.” Social compact, wrote Madison, “contemplates a certain number of individuals as meeting and agreeing to form one political society, in order that the rights, the safety, and the interests of each may be under the safeguard of the whole.” The rights to be protected by the political society are not created by government—they exist by nature—although governments are necessary to secure them. Thus political society exists to secure the equal protection of the equal rights of all who consent to be governed. This is the original understanding of what we know today as “equal protection of the laws”—the equal protection of equal rights. Each person who consents to become a member of civil society thus enjoys the equal protection of his own rights, while at the same time incurring the obligation to protect the rights of his fellow citizens. In the first instance, then, the people are a militia, formed for the mutual protection of equal rights. This makes it impossible to mistake both the meaning and the vital importance of the Second Amendment: The whole people are the militia, and disarming the people dissolves their moral and political existence.


The Preamble to the Constitution stipulates that “We the people . . . do ordain and establish this Constitution for the United States.” It is important to note that the people establish the Constitution; the Constitution does not establish the people. When, then, did “we the people” become a people? Clearly Americans became a people upon the adoption of its first principles of government in the Declaration of Independence, which describes the people both in their political capacity, as “one people,” and in their moral capacity, as a “good people.” In establishing the Constitution, then, the people executed a second contract, this time with government. In this contract, the people delegate power to the government to be exercised for their benefit. But the Declaration specifies that only the “just powers” are delegated. The government is to be a limited government, confined to the exercise of those powers that are fairly inferred from the specific grant of powers. Furthermore, the Declaration specifies that when government becomes destructive of the ends for which it is established—the “Safety and Happiness” of the people—then “it is the Right of the People to alter or to abolish it, and to institute new Government.” This is what has become known as the right of revolution, an essential ingredient of the social compact and a right which is always reserved to the people. The people can never cede or delegate this ultimate expression of sovereign power. Thus, in a very important sense, the right of revolution (or even its threat) is the right that guarantees every other right. And if the people have this right as an indefeasible aspect of their sovereignty, then, by necessity, the people also have a right to the means to revolution. Only an armed people are a sovereign people, and only an armed people are a free people—the people are


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indeed a militia. The Declaration also contains an important prudential lesson with respect to the right to revolution: “Prudence . . . will dictate,” it cautions, “that Governments long established should not be changed for light and transient causes.” It is only after “a long train of abuses and usurpations pursuing invariably the same Object,” and when that object “evinces a design to reduce [the People] to absolute Despotism,” that “it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security.” Here the Declaration identifies the right of revolution, not only as a right of the people, but as a duty as well—indeed, it is the only duty mentioned in the Declaration. The prudential lessons of the Declaration are no less important than its assertion of natural rights. The prospect of the dissolution of government is almost too horrible to contemplate, and must be approached with the utmost circumspection. As long as the courts are operating, free and fair elections are proceeding, and the ordinary processes of government hold out the prospect that whatever momentary inconveniences or dislocations the people experience can be corrected, then they do not represent a long train of abuses and usurpations and should be tolerated. But we cannot remind ourselves too often of the oft-repeated refrain of the Founders: Rights and liberties are best secured when there is a “frequent recurrence to first principles.”


In District of Columbia v. Heller, the Supreme Court handed down a decision that for the first time held unambiguously that the Second Amendment guaranteed an individual the right to keep and bear arms for purposes of self-defense. Writing for the majority, Justice Scalia quoted Blackstone’s Commentaries on the Laws of England, a work well known to the Founders. Blackstone referred to “the natural right of resistance and self-preservation,” which necessarily entailed “the right of having and using arms for self-preservation and defense.” Throughout his opinion, Justice Scalia rightly insisted that the Second Amendment recognized rights that preexisted the Constitution. But Justice Scalia was wrong to imply that Second Amendment rights were codified from the common law—they were, in fact, “natural rights,” deriving their status from the “Laws of Nature and of Nature’s God.” In his Heller dissent, Justice John Paul Stevens boldly asserted that “there is no indication that the Framers of the Amendment intended to enshrine the common-law right of self-defense in the Constitution.” In a perverse way, Justice Stevens was correct for the same reason Justice Scalia was wrong: What the Framers did was to recognize the natural right of self-defense. Like the right to revolution, the right to self-defense or self-preservation can never be ceded to government. In the words of James Wilson—a signer of the Declaration, a member of the Constitutional Convention, and an early justice of the Supreme Court—“the great natural law of self-preservation . . . cannot be repealed, or superseded, or suspended by any human institution.” Justice Stevens, however, concluded that because there is no clause in the Constitution explicitly recognizing the common law right of self-defense, it is not a constitutional right and therefore cannot authorize individual possession of


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weapons. What Justice Stevens apparently doesn’t realize is that the Constitution as a whole is a recognition of the “the great natural law of self-preservation,” both for the people and for individuals. Whenever government is unwilling or unable to fulfill the ends for which it exists—the safety and happiness of the people—the right of action devolves upon the people, whether it is the right of revolution or the individual’s right to defend person and property. Justice Scalia noted that those who argued for a collective-rights interpretation of the Second Amendment have the impossible task of showing that the rights protected by the Second Amendment are collective rights, whereas every other right protected by the Bill of Rights is an individual right. It is true that the Second Amendment states that “the people” have the right to keep and bear arms. But other amendments refer to the rights of “the people” as well. The Fourth Amendment, for example, guarantees “the right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizure.” But there seems to be universal agreement that Fourth Amendment rights belong to individuals. And what of the First Amendment’s protection of “the right of the people peaceably to assemble and to petition the Government for a redress of grievances?” Justice Stevens argues that these rights are collective rights. After all, he avers, “they contemplate collective actions.” It is true, the Justice concedes, that the right to assemble is an individual right, but “its concern is with action engaged in by members of a group, rather than any single individual.” And the right to petition government for a redress of grievances is similarly, he says, “a right that can be exercised by individuals,” even though “it is primarily collective in nature.” Its collective nature, he explains, means that “if they are to be effective, petitions must involve groups of individuals acting in concert.” Even though individuals may petition government for redress, it is more “effective” if done in concert with others, even though “concert” is not necessary to the existence or the exercise of the right. With respect to assembly, Justice Stevens argues, there cannot be an assembly of one. An “assembly” is a collection of individual rights holders who have united for common action or to promote a common cause. But who could argue that the manner in which the assemblage takes place, or the form that it takes, significantly qualifies or limits the possession or exercise of the right? We might as well argue that freedom of speech is a collective right because freedom of speech is most effectively exercised when there are auditors; or that freedom of the press is a collective right because it is most effectively exercised when there are readers. Justice Stevens’ argument is thus fanciful, not to say frivolous. The Court in Heller did indicate, however, that there could be some reasonable restrictions on gun ownership. “Longstanding prohibitions on the possession of firearms by felons and the mentally ill,” for example, will continue to meet constitutional muster. Laws that forbid “carrying firearms in sensitive places such as schools and government buildings” are also reasonable regulations, as are “conditions and qualifications on the commercial sale of arms.” The prohibition on “dangerous and unusual weapons”—including automatic firearms—fall outside Second Amendment

guarantees as well. But the Heller decision is clear that handgun possession for self-defense is absolutely protected by the Second Amendment. Can handguns be carried outside the home as part of “the inherent right of self-defense?” The Court indicated that handguns can be prohibited in “sensitive places,” but not every place outside the home is sensitive. And if carrying weapons in a non-sensitive area is protected by the Second Amendment, can there be restrictions on concealed carrying? These are all questions that will have to be worked out in the future, if not by legislation, then by extensive litigation. The Supreme Court took a further important step in securing Second Amendment rights in McDonald v. Chicago (2010), ruling that these rights as articulated in Heller were fundamental rights, and thus binding on the states through the due process clause of the Fourteenth Amendment. We have to remember, however, that both of these cases were decided by narrow, 5-4 majorities, and that new appointments of more progressive-minded justices to the Court could easily bring about a reversal. For the moment, Second Amendment rights seem safe, but in the long term a political defense will be a more effective strategy. As Abraham Lincoln once remarked, “Whoever moulds public sentiment, goes deeper than he who enacts statutes, or pronounces judicial decisions.” Shaping and informing public sentiments—public opinion—is political work, and thus it is to politics that we must ultimately resort. In the current climate of public opinion, Congress will have little appetite for passing an assault gun ban. More likely, it will be satisfied with passing legislation aimed at gun trafficking and tightening background checks. We must remember, however, President Obama’s pledge: “If Congress won’t act then I will.” He has already issued 23 gun-related executive orders, and some of them are rather curious. One of them notes that there is nothing in the Affordable Care Act that prevents doctors from asking patients about guns in the home; another directs “the Centers for Disease Control to research the cause and prevention of gun violence.” The President’s power to act through executive orders is as extensive as it is ill-defined. Congress routinely delegates power to executive branch agencies, and the courts accord great deference to agency rule-making powers, often interpreting ambiguous legislative language or even legislative silence as a delegation of power to the executive. Such delegation provokes fundamental questions concerning the separation of powers and the rule of law. .... The Gun Control Act of 1968 gives the President the discretion to ban guns he deems not suitable for sporting purposes. Would the President be bold enough or reckless enough to issue an executive order banning the domestic manufacture and sale of assault rifles? .... Are these simply wild speculations? Perhaps—probably! But they are part of the duty we have as citizens to engage in a frequent recurrence to first principles. n Copyright © 2013 Hillsdale College. “Reprinted by permission from Imprimis, a publication of Hillsdale College.” Edward J. Erler is professor of political science at California State University, San Bernardino. He earned his B.A. from San Jose State University and his M.A. and Ph.D. in government from the Claremont Graduate School.

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CHINA TODAY: In Their Own Words China’s New Deal Zhu Feng, Reprinted from China Today, May 2013 The leadership transition in China, which began in November 2012 at the 18th National Congress of the Communist Party of China (CPC), was completed at the end of the annual session of China’s legislature in March 2013. The country’s new leaders have made their debut and new local leaders have also taken up their places. Foreign media are very interested in the new leaders’ governance philosophies and policy directions, while Chinese people are looking forward to an everimproving life under the new leadership. In the months after the new leadership took power, China appears to have entered a period of accelerated reform.

Reform Momentum

China’s development has reached a historical turning point. While 35 years of reform and opening-up have delivered continued and fast economic development, many developmental issues have also surfaced. These include income disparity, unbalanced development across regions, serious environmental pollution and degradation, and corruption. These problems have made it more and more challenging for China to maintain both sound and fast growth. If not addressed in time, they may make future development unsustainable. Sluggish growth in Europe, the United States and Japan has also increasingly hindered China’s exports. China’s economy is under heavy pressure from excessive production capacity and an unsustainable investment-driven growth model. The country must speed up economic restructuring, boost domestic demand, step up industrial innovation and give a bigger role to the market. These challenges impel the government not only to reconsider its medium and long-term economic and social development strategies, but also to explore new models of governance and economic development. At this historical moment of transition, reform has become a buzzword. It represents a social consensus, and testifies to the CPC’s ruling ability and the new leadership’s insights and courage. The new leadership under President Xi Jinping and Premier Li Keqiang has made clear China’s future reform direction from the very beginning. In the past few months, they have got people feeling that reform is instilling the country with new vitality and hope. Reform has been the most frequently mentioned topic in both Xi and Li’s public speeches since last November. On his trip to Shenzhen City, Guangdong Province, last December, Xi clearly expressed a determination to carry on Deng Xiaoping’s philosophy of reform and sent out an important message that Deng-style reform is the answer to the country’s development problems.

Reform Ideas

Xi has elaborated on the country’s reform guidelines, measures and paths on several occasions. His discourse revealed the new leadership’s resolution to innovate the country’s governance model to suit current realities. On December 31, 2012, at a group study meeting of the Political Bureau of the CPC Central Committee, Xi said the reform process is partly designed by the country’s top leaders and partly like crossing the river by feeling for stones on the river bed. He said that leaders should have the bigger picture

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in mind, improve top-level design of reform and put greater focus on pursuing reform in a more systematic, comprehensive and coordinated way. They should simultaneously encourage bold exploration and a pioneering spirit, and continue to deepen reform and opening-up. In his keynote speech at the closing of the first session of the 12th National People’s Congress (NPC), Xi said that to pursue the “Chinese dream,” China must take the Chinese path, spread the Chinese spirit, and strengthen national solidarity. His speech, drawing heavily on the country’s history and reality, departed from traditional Marxist-Leninist rhetoric. When Li met the press on March 17 right after the conclusion of the annual session of the country’s top legislative body, he talked about institutional reform and transformation of government functions, and analogized it to “restoring to the market the hand that has mis-grown on the government.” He said, “transforming government functions is to redefine and rationalize the relations between the government, market and society. Put simply, the government should manage only the matters that fall within its purview, and leave to the market and society what they can do well.” At the same session, a government reshuffle plan was announced, which reduced the number of government departments directly under the State Council from 27 to 23. Li also stressed that China might be loosing the “demographic dividend” created by abundant cheap labor, but that it must seize the “reform dividend.” He stipulated the need for China’s future economic development to be more marketdriven. The Premier also described reforms to curb government power as a “self-imposed revolution” which would be as painful as cutting one’s own flesh.

Reform Actions

In the past few months, the new leaders have not only talked the talk about reform, but also walked the walk. In December, as the General Secretary of the CPC Central Committee, Xi demanded that officials adhere to the “eight disciplines” designed as part of an effort to reduce extravagance by officials. Xi’s “eight disciplines” include urging top leaders to conduct grassroots surveys to get a clearer idea of reality on the ground, and reduce formalities and fanfares in meeting and travel arrangements. Officials are required to bring smaller entourages during trips, and not to be greeted with welcome banners, red carpets, floral arrangements or grand receptions. Security measures such as road clearances should be reduced. In the past three months, these austerity initiatives have shown their effectiveness. For instance, public spending on lavish feasts has been curbed, as indicated by the sharp drop in the price of Moutai, an expensive liquor usually consumed at public expense. Xi took the lead in following these restraints. During his recent domestic visits, he arrived with little pomp and interacted with the common people. At this year’s National People’s Congress session, Li pledged that the government will disclose public spending on official receptions, vehicles and overseas travels in 2013, freeze investments on constructing government office buildings and strictly manage official vehicles. Xi said that the CPC should be able to put up with sharp criticism, correct mistakes if it has committed them and avoid them if it has not. He asked CPC committees at all levels to readily accept and welcome supervision from non-communist parties and personages so as to improve their work style. Xi made these remarks on February 6 while meeting representatives of non-communist parties, the All-China Federation of Industry and Commerce, and those without party affiliations. So far, the new leadership has conveyed strong messages of reform and showed bold determination to deepen it. We look forward to more pleasant surprises from Chinese leaders in the post-Deng Xiaoping era. n Zhu Feng is a professor with the School of International Studies, Peking University. content_543683.htm

LETTER Nowadays, we are no strangers to the phrase “Chinese Dream.” As I see it, this “Dream” has to be based on building a government of the people, by the people and for the people, because deep down the true strength of a nation does not come form the might of its army or the scale of its economy, but from the enduring and unyielding power of its people. There are rising concerns about food safety. There are parents who lie awake after their children have fallen asleep and wonder how they can make the next mortgage payment or pay their medical bills or save enough for their children’s education. Many work back-to-back shifts to improve their lot in life. The wide rural-urban divide is mirrored in health, education, housing and pensions. We know that these issues cannot be solved over a short period of time. But it is time we recognize our share Chinese Dream and work toward it to ensure everyone has the chance of a happy life. — Shi Li, Letter to the Editor, China Today, May 2013

LETTER I don’t think over emphasis on work is the reason why many Chinese are spending less time with their loved ones. In many cases we work overtime because we fear that if we don’t we may lose our jobs. Labor Laws on overtime pay exist, but inobservance is rampant. Competition in the labor market of a populous nation is fierce and a porous social security network means unemployment can be a financial disaster for a family. Meanwhile, many urban dwellers are moving out of the city center to the suburbs, where housing prices are lower but job opportunities fewer. This means they have to spend long hours commuting between the office and home. In big cities bad traffic further extends this daily Odyssey. We Chinese value family ties no less than those in other cultures, if not more, but there are so many factors in a country still in its developing stage that prevent many of us from helping our wives make dinner and reading stories to our kids every night. — Peng Mu, Letter to the Editor, China Today, May 2013

China’s Shadow Banking Channel News Asia BEIJING: China’s shadow banking activities have risen nearly 70 per cent over the past two years and now total more than half the size of the world’s second-largest economy, ratings agency Moody’s said on Monday. Shadow banking includes private lending, off-balancesheet vehicles and trusts, and allows borrowers to circumvent banks’ formal underwriting standards, as well as official regulation. Such lending has surged 67 per cent since the end of 2010, Moody’s said in a report, reaching an estimated total of 29 trillion yuan (US$4.7 trillion) at the end of last year, or 55 per cent of China’s GDP. The rapid growth was partly due to some borrowers having difficulties obtaining regular bank loans, according to the report, and threatened the health of the banking system and the overall economy. “Shadow banking may encourage excessive financial leverage in the broad economy and add to credit bubble concerns,” Moody’s said. “Given the substantial scale and growth of shadow banking activities in China, we are doubtful of the banks’ ability to isolate themselves from a significant increase in defaults in the shadow banking domain.” China’s banking regulator has sought to rein in nontransparent lending activities and in March ordered banks to step up checks on wealth management products as part of a bid to boost risk control and openness. But Moody’s said: “The impact from shadow banking on banks will depend on the amount and timing of losses and how they are allocated, variables that are difficult to assess at this point, given the lack of transparency and fast-evolving nature of shadow banking in China.” n See also china-shadow-banking-growing-fast/673610.html

The Herald Examiner

FEATURE Two months after new national leaders took office in China, the editors of this publication had a chance to travel to that country last month. We visited two major cities and saw the countryside between them. Three things were very striking: a sense of breathtaking change occurring on many levels — from urban construction to national identity; the absence from common view of the Communist Party and few expressions of patriotic pride; and a surprising openness in their English language press to self-examination over the country’s present and future. Here are some examples...

First-Tier Cities Barely Livable, Report Says Zheng Xin, China Daily, May 21, 2013

“It’s a pity that a big part of the social fortune created by China’s rapid economic growth is unequally distributed. This has not only widened the income gap between the rich and the poor, it has also become the biggest threat to social stability.” * — Zhuang Juwei, deputy director of the Chinese Academy of Social Sciences’ Institute of Population and Labor Ecomonics, speaking at a news conference on the academy’s release of an economic blue book. [quoted in China Daily, page 2, May 23, 2013]

Anti-Graft Staff Told to Ditch Their VIP Cards Shanghai Daily, May 28, 2013 China’s top anti-corruption official has demanded his staffers ditch their VIP cards, commonly given out by Chinese businesses to grant access to discounts or exclusive services, state media said on Monday, as part of the country’s push to defeat graft. VIP cards in China can offer everything from cheap deals at massage parlours to free gifts in department stores and preferential seating at popular restaurants, and hence offer countless opportunities for abuse by corrupt officials and businesspeople. “Although membership cards are small (objects), they reflect big problems of working style,” the official Xinhua news agency cited Wang Qishan, head of the ruling Communist Party’s anti-corruption bureau, as saying at a meeting. Officials and employees working in disciplinary and supervisory departments should discard all their VIP cards by June 20 and follow this order “seriously and earnestly”, the report added. This campaign is a way for graft-busters to act by example for other party members by showing they have high standards, Wang said. “The demands of the campaign are not onerous, but they have to be followed and are totally doable,” he added. “Men of honour need to show that they are honourable.” Since becoming Communist Party boss in November, and president in March, Xi Jinping has made battling pervasive corruption a top theme of his administration, warning the problem is so severe it could threaten the party’s survival. A major theme of that fight has been an austerity drive that has emptied top-end restaurants and dented the sale of expensive food and drink, as the party tries to allay criticism of the extravagant lifestyles of some officials. However, there has been little apparent progress to get officials to publicly disclose their assets, and the party has given no indication it will allow the establishment of a fully independent judicial body to tackle corruption. This campaign is a way for graft-busters to set an example for other Party members by showing they have high standards, Wang said. ‘This campaign is not that high-standard. It’s necessary and feasible, and everybody should be able to do it,” Wang said, welcoming supervision from both within the Party and from the public. June 2013

Since becoming communist Party Chief in November, and president in March, Xi Jinping has made battling pervasive corruption a major theme of his administration, warning that the problem could threaten the Party’s survival. A major theme of the fight has been an austerity drive that has emptied top-end restaurants and dented the sale of expensive food and drink, as the Party tries to allay criticism of some officials’ extravagant lifestyles. Wang Yukai, a professor at the Chinese Academy of governance, said of the VIP cards: “It’s not cash, but cardholders can enjoy all kinds of benefits and privileges. Whoever offers those cards to officials must have their own motivations. The work style of disciplinary and supervisory officials directly affects the results of the entire Party’s war against corruption. Such a move shows their determination to strengthen discipline and will also intimidate other corrupt officials,” the professor said. n

Most first-tier cities in China are barely suitable for living due to their poor ecological environment, despite rapid economic development and preferential regulations for investment, said a newly released report by a top Chinese think tank on Sunday. First-tier cities, including Beijing, Shanghai and Guangzhou, failed to make the list of habitable cities even though they are in the top 10 in terms of commercial advantages, unification of city and countryside, and culture development, according to a report on China’s urban competitiveness from the National Academy of Economic Strategy under the Chinese Academy of Social Sciences. Only two first-tier cities, Hong Kong and Macao, are among the country’s most livable cities, said the report. Beijing ranks best in terms of academic resources and intellectual atmosphere, second-best in business environment and sustainability, and third in cultural industry. But it dropped to 74th and 119th in habitable and ecological environment, the report said. Huang Hui, a 27-year-old software engineer from Beijing, said he found the report “objective”. “Beijing has the best medical, academic resources compared with other cities, but it’s not necessarily the best choice when it comes to being habitable,” he said. “I’m proud of the cultural diversification in the city, but it’s a pity that Beijing sacrifices the most basic essentials, air and water, simply in exchange for all the rapid development.” In the past decade, there have been mounting problems in cities nationwide, including traffic jams, housing tension and food safety issues. Li Guangquan, a researcher with the China Center for Service Sector Research, said the ultimate goal of urban competitiveness should be the pursuit of citizens’ benefits. However, many first-tier cities, despite their outstanding competitiveness, are barely people-oriented and hardly satisfactory in ecological protection, Li said. High housing prices have become the main reason that some cities are increasingly “uninhabitable”, with other reasons including poor air quality and traffic congestion, he said. According to the report, livability is the primary and most basic function of a city and plays a key role in upgrading urban competitiveness. Ni Pengfei, director of the center for city and competitiveness under the Chinese Academy of Social Sciences, said the competitiveness of a city usually rapidly ascends as economic competitiveness increases. However, the rise slows down and even descends soon afterward. n (China Daily 05/21/2013 page4)

(Xinhua/Shanghai Daily)

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began to weaken in the 1980s. The policies of Ronald Reagan and Margaret Thatcher were ascendant, and globalization was putting pressure on Canada to make reforms. In the mid-1980s, the Canadian central bank adopted a goal of price stability, which greatly reduced inflation and has kept it low and stable ever since. And following U.S. tax reforms in 1986, Canada enacted its own income tax cuts under Progressive Conservative Prime Minister Brian Mulroney. Thatcher’s privatization revolution also inspired reforms in Canada. The government privatized Air Canada in 1988, Petro- Canada in 1991, and Canadian National Railways in 1995. All in all, Canada privatized about two dozen “crown corporations” in the late 1980s and early 1990s. In 1996 it even privatized the air traffic control system, which provides a good model for possible U.S. reforms. Privatization reduced government debt and helped spur economic growth

actually spent less when they reformed their budget in the 1990s. The Canadian government cut defense, unemployment insurance, transportation, business subsidies, aid to provincial governments, and many other items. After the first two years of cuts, the government held spending growth to about 2 percent for the next three years. With this restraint, federal spending as a share of GDP plunged from 22 percent in 1995 to 17 percent by 2000. The spending share kept falling during the 2000s to reach 15 percent by 2006, which was the lowest level since the 1940s. In recent years, spending spiked upward in both the United States and Canada because of the recession, but it is now falling again. In 2012 federal spending was 7 percentage points of GDP higher in the United States than in Canada. Canadian federal spending at 15.6 percent of GDP is expected to decline in coming years. The spending reforms of the 1990s allowed the Canadian federal government to balance its budget every hen U.S. policymakers talk about “cutting” spendyear between 1998 and 2008. ing, they usually mean reducing spending growth The govrates, but the Canadians actually spent less when ernment’s debt plunged from 68 they reformed their budget in the 1990s. percent of GDP in 1995 to about 34 percent today. In by creating a more dynamic industrial structure. the United States, federal debt held by the public fell during The other major reform of the late 1980s was the free the 1990s, reaching a low of 33 percent of GDP in 2001, but trade agree- ment with the United States. The debate over the debt has soared since then to reach more than 70 percent 1988 agreement was a titanic political struggle in Canada. today. Data from the Organization for Economic CooperaBut in the years following passage, the success of the agreetion and Development show that total federal, provincial, ment has been a powerful force in reorienting Canada toward and local government spending in Canada plunged from a market-based policies. peak of 53 percent of GDP in 1992 to just 39 percent by the mid 1990s. In 2012, spending was 42 percent of GDP, SPENDING REFORMS OF THE 1990S which compares to total government spending in the United Canada was starting to move in the right direction, but States of 41 percent. Government spending in both countries rising government spending and debt were undermining is too high, but Canada has at least been moving in the right growth and creating financial instability. By the early 1990s direction on fiscal reforms. combined federal, provincial, and local spending peaked Aside from budget cuts, Canada improved its fiscal at more than half of gross domestic product. In the 1993 outlook by fixing the Canada Pension Plan, which is like the elections, Prime Minister Jean Chretien’s Liberals gained U.S. Social Security system. In 1998 Canada began moving power promising fiscal restraint, but this was the party of the CPP from a pay-as-you-go structure to a partially funded Trudeau, and so major reforms seemed unlikely. In the first system. Today the CPP is solvent over the foreseeable fuLiberal budget in 1994, Finance Minister Paul Martin proture, which contrasts with Social Security’s huge unfunded vided some mod- est spending restraint. But in his second obligations. Note, however, that Canada supplements the budget in 1995, he began serious cutting. In just two years, CPP with additional retirement subsidies out of general tax total noninterest spending fell by 10 percent, which would receipts. be like the U.S. Congress chopping about $330 billion from Canada’s fiscal reforms undermine the Keynesian notion this year’s noninterest federal spending of $3.3 trillion. When that cutting government spending harms economic growth. U.S. policymakers talk about “cutting” spending, they usuCanada’s cuts were coincident with the beginning of a 15ally mean reducing spending growth rates, but the Canadians year boom that ended only when the United States dragged


Canada into recession in 2009. The Canadian unemployment rate plunged from more than 11 per- cent in the early 1990s to less than 7 percent by the end of that decade as the government shrank in size. After the 2009 recession, Canada has resumed solid growth and its unemployment rate today is lower than the U.S. rate. Another lesson from Canada is that the rise of groups outside of the major political parties can pressure governments to make reforms. Canada’s version of the Tea Party was the Reform Party, which arose in the early 1990s and pushed the major parties to support spending cuts, tax cuts, decentralization, and parliamentary reforms. The Reform Party elected numerous members to parliament in 1993, and it became the main opposition party in parliament in 1997. In the 2000s, the party went through structural changes and ultimately merged with the Progressive Conservatives to become the Conservative Party of current Canadian Prime Minister Stephen Harper. As the new millennium dawned, a slimmed-down Canadian government under the Liberals enjoyed large budget surpluses and pursued an array of tax cuts. The Conservatives continued cutting after they assumed power in 2006. During the 2000s the top capital gains tax rate was cut to 14.5 percent, special “capital taxes” on businesses were mainly abolished, income taxes were trimmed, and income tax brackets were fully indexed for inflation. Another reform was the creation of Tax-Free Savings Accounts, which are like Roth IRAs in the United States, except more flexible. The most dramatic cuts were to corporate taxes. The federal corporate tax rate was cut from 29 percent in 2000 to 15 percent in 2012. Most provinces also trimmed their corporate taxes, so that the overall average rate in Canada is just 26 percent today, according to KPMG. U.S. policymakers are currently considering a corporate tax cut, but they are concerned that the government may lose revenues. But Canadian experience shows that governments don’t lose money when they cut high corporate tax rates. That is because rate cuts induce an expansion in the tax base as economic activity increases and tax avoidance decreases. Canada’s federal corporate tax rate has been cut from 38 percent in the early 1980s to just 15 percent today. Despite the much lower rate, tax revenues have not declined. Indeed, corporate tax revenues averaged 2.1 percent of GDP during the 1980s and a slightly higher 2.3 percent during the 2000s. Now compare Canada with the United States. In 2012, Canada collected 1.9 percent of GDP in federal corporate income taxes with a 15 percent corporate tax rate. The United States collected 1.6 percent of GDP at a 35 percent corporate tax rate. Thus, the high U.S. rate is not only bad for the economy, but it also does not help the government collect any additional revenue.


One of Canada’s strengths is that it is a decentralized federation. The provinces compete with each other over fiscal and economic matters, and they have wide latitude to pursue different policies. Federalism has allowed for healthy policy diversity in Canada, and it has promoted government restraint. Government spending has become much more centralized in the United States than it has in Canada. In the United States, 71 percent of total government spending is federal and 29

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percent is state-local. In Canada it’s the reverse—38 percent is federal and 62 percent is provincial-local. The federalism difference between the countries is striking with regards to K–12 education. While federal control over U.S. schools has increased in recent decades, Canada has no federal department of education. School funding is left to the provinces, which seems to work: Canadian school kids routinely score higher on international comparison tests than do U.S. kids. The countries also differ with regard to the amount of top-down control exerted on subnational governments through federal aid programs. The United States has a complex array of more than 1,100 aid-to-state programs for such things as highways and education. Each of these aid programs comes with a pile of regulations that micromanage state and local affairs. By contrast, Canada mainly has just three large aid programs for provincial governments, and they are structured as fixed block grants. It is true that one of these grants helps to fund the universal health care system, which is a big exception to the country’s generally decentralized policy approach. Nonetheless, having just a few large block grants is superior to the U.S. system of a vast number of grants, each with separate rules and regulations... While Canada has made a great deal of progress, it still has a large welfare state. One problem is the huge governmentrun health care system. Health care spending is soaring, and wait times for medical procedures are a serious problem. Another problem is the large deficit spending in some of the provinces. Unlike U.S. states, Canadian provinces can freely borrow and spend without having to balance their budgets each year. .... Canada is thus far from being a free-market nirvana. However, its reforms have been impressive and its economy has grown strongly. Its score on “economic freedom” in the Fraser Institute’s Economic Freedom of the World report is now higher than the score for the United States. All this raises a question: Why are U.S. policymakers unable to make major fiscal reforms like the Canadians have? One answer is that the U.S. governing structure—with its separated powers— makes rapid policy change more difficult than does the Canadian parliamentary system. Many of the Canadian reforms were enacted by a Liberal Party that moved from the political left to the center. At the same time, the rising Reform Party essentially displaced the old Progressive Conservative Party, which had moved too far to the left. Voters did their part by supporting the reform-minded parties at the ballot box. In 2010, American voters demanded cuts to government spending and debt. Some members of Congress are heeding the call and introducing plans to restructure entitlements and terminate programs. However, most policymakers are still resisting the major spending cuts, privatization, and other Canadian-style reforms that we need to avert a fiscal crisis and restore strong economic growth to the United States. n Reprinted from the Cato Journal, Vol. 33, No. 2 (Spring/Summer 2013). Copyright © Cato Institute. Used with permission. sites/

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SUPERPOWER RESPONSIBILITIES Continued from page 1 and China to be in constant contact. It helps avoid dangerous misunderstandings. I want American companies to invest there as much as they see fit. I want them to trade with China. I want Chinese companies to invest in the U.S. I sure as heck want the choice of buying Chinese-made products. China’s rise is a reality. Period. We have to learn how to deal with that. But whether, in the long run, China will be friend or foe, none of us know. We don’t know where, in the next 10, 20, 30 years, threats are going to develop. The U.S. needs to maintain a full spectrum of power, including military power, to guard against this uncertainty, and to protect our vision. And, given the long lead times involved in developing the necessary technology and forward deployments, it requires long-term planning. This debate is not about China or any other particular current global threat. It is about whether, as Roosevelt put it, Americans choose to deny their nation’s responsibilities. I admit that American leadership is also self-interested. We sometimes have difficult choices to make. We cannot correct every wrong in the world. However, wherever we can, we should try to define our interests in the context of broader, more enlightened ones. Far more often than not, that is just what the U.S. has done. We didn’t seek to forever occupy Japan or Korea. We sought to establish a military presence in each that would keep the peace. Those governments—both sides of their political spectrums—want us there. It is true also for our presence in Europe. And, wherever we are, when our host nation asks us to leave, whether it’s the Filipinos or the Iraqis, we leave. After World War II, the U.S. didn’t force the nations it defeated to buy its goods; it created an open trading system that would maximize benefits for all nations. That’s how we ended up with the economic miracles of Japan, South Korea, Hong Kong, Singapore, and Taiwan. It’s how China ended up being the second largest economy in the world. It’s how they lifted hundreds of millions of people out of poverty. The U.S. needs to maintain and extend its economic leadership. This means opening markets further. All the nations in Asia are negotiating free trade agreements with one another. The U.S. has just three agreements in the region: with Singapore, South Korea, and Australia. Now, the Obama Administration is negotiating the 12-nation Transpacific Partnership (TPP) to make up lost ground. It’s a great idea. We should also find new trading partners there—Taiwan, Thailand, and India. Thankfully, President Obama will find a willing Congress. The politics of free trade are pretty much settled. A free trade agreement has never failed to pass the U.S. Congress. When it comes to promoting political freedom, I’m not saying the U.S. has not made mistakes. I am saying that without liberty as part of the conversation with our friends and allies, many millions in Asia would not be free today. It is no coincidence that democracy has developed most thoroughly in the countries where the U.S. is most deeply involved: Japan, South Korea, Taiwan. Our allies know that our vision is part of the deal. Yes, Marcos stayed in power in the Philippines for too long and with American support. But it was also the U.S. that

told him it was time to go. We put up with dictators in Korea, Taiwan, and Indonesia, too, but even as they helped us win the Cold War, we didn’t stop talking to them about freedom, and that pressure ultimately contributed to democratic outcomes. Those considering an Asia with less American presence have to ask themselves whether freedom would do as well without us. In fact, proponents of American withdrawal have to ask themselves a more important question: Whether they have responsibility for anyone’s well-being but their own! Times are, indeed, changing in Asia. Power is shifting. I have traveled to Asia quite a bit—easily 50 times over the course of my career. I’ve seen the change first-hand. One thing that is not changing is that the U.S. is the one “indispensable” ingredient for continued peace, prosperity, and freedom around the world. Everyone I talk to in Asia tells me that. They must be talking to President Obama, too, because he’s also used the word “indispensable” to describe America’s role in the world. Of course, these countries want access to our markets and our capital. But on the diplomatic side, it is also the case that the U.S. is the closest thing in Asia to an honest broker. And because if anything, nationalist tensions in Asia are only growing, this is not going to change anytime soon. Sure, there are South Koreans who would rather not have American troops in their country. But they are not the majority. And they like us a whole heck of a lot more than they like the prospect of another invasion. .... U.S. presence has been essential to peace on the Korean peninsula and many other places around the world. The cost of conflict undeterred is much higher in causalities and economic impact than preventing war—which is what we have done again and again, worldwide. It is a responsibility we ought to continue to honor. Now, advocates for withdrawal from the world often say that there are some missions (security guarantees for Taiwan, South Korea) that the U.S. ought to continue. I agree with these. I’d add a few more to encompass all of our treaty commitments, but in these cases, I certainly agree. The problem is that, if you deprive the U.S. military of the means to carry out these missions, your support is just rhetoric. It is actually a sort of backhanded isolationism. Without our troops in Japan, and greater capability just over the horizon, the troops we have in South Korea (more than 28,000 flesh and blood men and women) are just speed bumps. The Seventh Fleet is based in Japan. You can’t defend Taiwan without it. You need Marines in Okinawa. You need forces in Guam. In this day and age, if having troops in Europe was all about defending Germany from Russian invasion, I think I might be inclined to draw down there, too. But it’s not about that. Our troops in Europe are about defending our mutual interests in the neighborhood around it. If we have to get our military involved again in the Middle East, those troops are going to come from bases in Europe. When our injured are evacuated, they’re going to be flown seven hours to a top-rate American military hospital in Germany. The truth is, and isolationists know this, that if you starve the military of the resources to carry out its missions, those missions will shrink—even as you claim to support some of the most critical ones. When you withdraw from the world, either by imposing trade barriers or drawing down military commitments, you lose your ability to influence events. In fact, the opposite happens, and events dictate to you. As Americans, we lose our ability to realize our vision, and secure the interests that are tied to that vision. If we’re not negotiating free trade agreements, we’re not going to be the ones writing the rules. If we’re not contributing troops to NATO, we’re not going to have a hand in where and how Europe uses its forces. America has an ideology. It’s not left-wing or right-wing. It’s the American ideology of liberty. It is this cause that has motivated American involvement in international affairs since its founding. The U.S. cannot withdraw from the world. The scope of its responsibilities is derived from its size and power. The quality of its engagement—and the quality of the outcomes it has achieved—is derived from its adherence to universal values. The world is more peaceful, prosperous, and free today because of America. It will not remain so if we retreat from our responsibilities. n Used with permission. This was Lohman’s opening statement at the 51st annual International Affairs Symposium at Lewis & Clark College of Arts and Sciences.

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Free summer events begin June 25 with Gilbert & Sullivan’s Ruddigore. Cornell University’s School of Continuing Education and Summer Sessions is pleased to announce its 2013 summer events series. Free and open to the public, the series runs from June 25 to August 2 and features events at the Schwartz Center for the Performing Arts, lectures in the Alice Statler Auditorium in Statler Hall, and concerts on the Arts Quad.  The 2013 series includes: Tuesday events at the Schwartz Center, 7:30 p.m. June 25: Ruddigore—a concert version of the Gilbert & Sullivan opera presented by the Cornell Savoyards. [N.B.: Tickets will be required for this performance. They are free and will be available in the theater lobby starting at 6:15 on the day of the performance (limit four per person). Because of the Savoyards’ popularity, there will be a second performance on Wednesday, June 26.] July 2: Michael Zaretsky and Xak Bjerken: Works for viola and piano July 9: Desire and Decay (dance concert) presented by IC choreographer Lindsay Gilmour July 16: Rockwood Ferry, performing original music in the roots, jazz, and folk traditions July 23: Tango de Camara, chamber music ensemble from Ithaca College’s School of Music July 30: David Kaynor and George Wilson, master fiddlers of the Northeast Wednesday lectures at Statler Auditorium, 7:30 p.m. July 10: Kim Brown Bixler, “Growing Up in a Frank Lloyd Wright House” July 17: Lee Humphreys, “Social Media: Origins, Opportunities, and Risks” July 24: Walter Stahr, “William H. Seward: Abraham Lincoln’s Indispensable Man” July 31: Shimon Edelman, “The Happiness of Pursuit: Machineries of Joy” Friday concerts on the Cornell Arts Quad, 7:00 p.m. Rain location: Uris Hall Auditorium June 28: Melissa Cox and Mythica: Celtic-flavored prog rock, newgrass, and Americana July 5: Hardin Burns: Vocalist Jeannie Burns teams up with country/blues guitarist Andrew Hardin July 12: GoGone: Original roots, rock, and blues July 19: Rising Sign: Caribbean dance party! July 26: Evil City String Band: Old-time Appalachian

music and original songs August 2: Andrew and Noah Band: High-energy alternative folk For more information, visit the summer events website at or contact the School of Continuing Education and Summer Sessions, B20 Day Hall, Ithaca, NY 14853-2801; e-mail cusce@cornell. edu, phone 607.255.4987. If disability accommodations are needed, please contact Katy Heine at 607.255.8226.


The Gardener’s Trail, Sunday, June 16, 10:00 am -4:00 pm at various locations in Tompkins County. A special oneday event featuring free hands-on activities, samples and tours at locally-owned garden centers and nurseries. Explore the wealth of unusual plants, garden products and horticultural expertise in our county!  A list of participating businesses and activities offered at each can be found online at http:// Free event! Questions? Contact Chrys Gardener at Cornell Cooperative Extension of Tompkins County (607) 272-2292 or Sponsored by the Tompkins County Hotel Room Tax Fund. Coalition for Families, Thursday June 20, 8:15-9:30 am at Cooperative Extension Education Center, 615 Willow Avenue, Ithaca NY, 8:15-networking, tea/coffee, 8:30-intros & announcements; dialog begins at 8:45. Topic to be determined.  For more information, call Nancy Potter at (607) 272-2292 x127 or email  Meets every 3rd Thursday.   Gardener’s Pot Swap & Recycling Event, Thursday, June 20-Tuesday, June 25, 12:00-7:00pm at Cooperative Extension Education Center, 615 Willow Avenue, Ithaca NY. Leave your plastic nursery pots, trays and cell packs in good conditon in the designated area off the CCE-Tompkins main parking lot on Willow Avenue during this annual recycling event.  You may take away as many pots as you can use, too!  Plastic that is left after the event will be taken to a recycler for processing. This is a free opportunity for gardeners to recycle their plastic plant containers instead of throwing them away. Questions? Contact Monika Roth at Cornell Cooperative Extension of Tompkins County (607) 272-2292 or   Agriculture Plan Farmer Meetings, Thursday, June 20, 7:30-9:00pm at Cornell Cooperative Extension of Tompkins County, 615 Willow Avenue, Ithaca. Farmers who raise field crops in Tompkins County are invited to help update the

county’s Agriculture and Farmland Protection Plan. This is an opportunity for farmers to share their needs, issues, and concerns and to help develop strategies to address them. This is a project of the County Agriculture and Farmland Protection Board in cooperation with the County Planning Department and CCE-Tompkins. Please RSVP to Debbie Teeter, Cornell Cooperative Extension of Tompkins County (607) 272-2292 or email Compost with Confidence: Getting Started, Saturday, June 29, 11:00am-12:00PM at the Compost Demonstration site, Ithaca Farmers’ Market. Master Composter volunteers will provide information and hands-on demonstrations on how to set up and manage a compost system in any setting! This FREE 5-part series meets on the last Saturday of the month from June through October.  Each class covers composting basics and a special topic. Just show up, or sign up in advance by contacting Mila Fournier at ymf5@cornell. edu or call Corrnell Cooperative Extension of Tompkins County at (607) 272-2292.


The Tompkins County Office for the Aging finally opened the doors to its sparkling, new facility at 214 W. Martin Luther King Jr./State St., Ithaca. The new Human Services Annex building is a welcomed relocation for the Office for the Aging which had been previously located in the basement of the Tomkins CountyCourthouse. The Office for the Aging’s Director, Lisa Holmes noted that over 4,000 local seniors utilized services last year. We hope that the public stops in and takes advantage of what we have to offer older adults and family caregivers.”


The Registry is a free service that links individuals in need of in-home help with independent job seekers. If you or you loved one are in need of an experienced housekeeper, personal care aide, certified nurse’s aide, LPN or RN, the Registry can provide you with referrals. The Registry prescreens and checks references for all caregivers. You interview and negotiate the specific terms of employment with the caregiver. For more information, please contact Cheryl Baker, Registry Coordinator at the Finger Lakes Independence Center at 272-2433 or



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The Herald Examiner

FATHER & DAUGHTER DATE IDEAS Jay Payleitner Reprinted from A note to dads who really like the idea of “dating your daughter,” but don’t know where to start: Guys, you’re probably making it more complicated than it has to be. The idea is simply to enter her world and enjoy your time together. You can’t force deep, meaningful, life-changing conversations. But if you keep showing up … they’ll happen. And you’ll be glad you were there. If she’s a toddler, it’s pretty easy. Ten minutes lying in the grass, rustling in the leaves or making snow angels. If she’s five, it’s still pretty easy. Invest a half hour or so and go ahead and start calling your time together a “date.” Go for ice cream. McDs. Donuts and juice. A bike ride around the block. The idea is to be intentional about leaving the house—just you and her. Of course, you should still spend time goofing with your little girl in the driveway with a hula hoop, basketball, bubbles or sidewalk chalk. But a date should probably have a plan and a destination. About third grade or so, start thinking about kicking it up a notch. Movie dates, lunch dates, library dates. To make sure it becomes a habit, try connecting your daddy-daughter dates with her other scheduled activities. Pick her up after a practice or rehearsal and stop some place on the way home. Maybe take a class together. If you’re really gutsy, do something girls typically do with their moms like pottery painting, jewelry making or calligraphy. Do stuff she likes. Do stuff you like. Window shopping. Mini golf. Frisbee golf. Visit a museum. Visit a pet store. (Pet a puppy, talk to a parrot or buy a reptile without mom’s permission.) Go ice skating. Visit an apple orchard. Make a pie. Go horseback riding. Bowling. Birdwatching. Browsing a bookstore. And don’t think that only boys can enjoy sports. Take your daughter to an NFL, NHL, MLB, or

June 2013

NBA game. Or save a few bucks and go to a minor league or semi-pro game. Each time, remember to thank her “for the date.” One annual date you don’t want to miss is the daddydaughter dance presented by your church, school, or park district. You might even make it a double date with your daughter’s best friend and her dad. That’s a chance to connect with another dad—which is always a good thing—and see how your daughter interacts with her peers. Once you’ve established your daddy-daughter date routine, look for a chance to add one more strategic lesson: In the middle of your time together, hope something goes terribly wrong. The bowling alley is overbooked with leagues. The restaurant wait is 90 minutes. The skating rink is closed for repairs. A flat tire. Ants at the picnic. You lock your keys in the car. With any of these minor catastrophes, you have a wonderful opportunity to demonstrate patience, resourcefulness, and a sense of humor. These are all traits your daughter should expect in any fellow who takes her out. Of course, I’m not suggesting you orchestrate any near calamities on your daddydaughter dates, but I’m not ruling it out either. Here’s the point. The primary purpose of dating your daughter is making memories and cementing your lifetime connection. But there’s another huge benefit to showing up on time, opening her car door, treating her with respect, and handling any mishaps with grace and a smile… You’re modeling for your daughter the way any boy should act when she goes out on any date at any time. If and when some “unworthy weasel” takes her out, she won’t put up with any nonsense because her dad—that’s you—taught her how a gentleman acts on a date. Finally, when your daughter does start dating boys her own age, that doesn’t mean your dates with her should stop. Actually, that’s the season in life when you want to spend more time with her, not less. You may have to work a little harder to get on her busy

social calendar. But if you ask nicely, she just might fit you in. Oh yeah. Dad, don’t forget to date your wife, too.


Give yourself a mutual mission. Asking a young person’s opinion is surprising and empowering. “For Christmas, should I get mom the amethyst or opal earrings?” “What should we do for Grampa’s birthday this year?’ “We need some new patio chairs. What are your thoughts?” Treat her as an authority. Suddenly, she’s the teacher and you’re the student. “Hey, Sara, can I send a photo on my iPhone that’s 1.8 megabytes?” “I’m designing a flyer for the block party, can you take a look at this font?” “Bill from work wants to recommend some summer reading for his daughter who’s eight. Any ideas?” Volunteer at an event. Initially, she may not be happy that you signed up for that chaperone assignment, church event or fundraiser. But if you don’t embarrass her and stay in your assigned zone, she’ll be glad you’re there. Also, make sure you give her plenty of notice. “The Zimmermans asked us to help out at the Christmas dance. I guess we’re in charge of the punch bowl.” “Just letting you know, I’m driving one of the vans for the weekend retreat. And I’m staying in the boy’s cabin.” Get her attention. Figure out what middle school girls like—specifically your daughter and her friends—and give it to her. “Let’s get a puppy.” “Don’t know what got into me, but I bought a Groupon for horseback riding.” “When that movie comes out from that book you read, let’s take some of your friends to the midnight show.” “Pizza’s here!” Tell her you miss her. If you haven’t had a good conversation in a couple weeks, you’re both feeling the same way. “Hey kiddo. We have both been so busy, let’s do something this weekend. Maybe brunch after church. Or we could go to the flea market. What’s your schedule?” “You know, I’m reading a book for dads of daughters and it says I’m supposed to ask you out on a date. So pick a night. Any night!” n Reprinted from

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The Herald Examiner

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