Cry and Sigh Congress....

As many of you who read this blog know, I am a big fan of the Federalist Papers, a series of newspaper articles written by John Jay, Alexander Hamilton, and James Madison in between October 1787 and August 1788 at the height of the debate over ratification of the U.S. Constitution. Two of the most important of these are the Federalist 10 and 51 in which James Madison outlines both the challenges of designing government (No. 10) and then (along with Hamilton) offers his prescription for doing so (No. 51).

For those who care to read these two documents, the seeds of the supposed paralysis in the American political system can be found. The (in)famous separation of powers that sets up the brutal competition for authority among the three branches of government is-- brace yourselves-- all by design!!!!! I happen to be a fan of this design, in part because of its frustrating ability to short-circuit the "mischiefs of faction" (No. 10) and thwart the concentration of power (No. 51). 

One area in which the interbranch competition has frustrated many Americans is with respect to the War Powers. The so-called "Enumerated Powers" of Article I, Section 8 of the U.S. Constitution clearly states that the Congress has the sole power to declare war. Yet, Madison's division of labor over most issues in the design of the Constitution also assigns the responsibility of "Commander in Chief" of the armed forces to the President in Article II Section 2. While the Constitution manages to distribute a range of authorities across the three branches in ways that set up competition, that competition is a little different where the War Powers are concerned; Congress regularly capitulates to the President.

U.S. Trade Politics: Seen This Movie Before

Those of you who follow U.S. trade policy know how ugly things can sometimes get. In March of last year, I wrote a lengthy post about the conversion of Barack Obama from staunch opponent of trade liberalization to someone that had had some kind of epiphany and been reborn as a proponent of free trade (see link here).

In that post, I also foreshadowed a debate over Trade Promotion Authority that is now upon us. The U.S. Senate is poised to debate, and probably pass, a TPA bill in early may that would delegate negotiating authority to the President to complete two signature trade initiatives; the Trans Pacific Partnership (TPP) and the Trans-Atlantic Trade and Investment Partnership (TTIP). For those of you unfamiliar with how TPA actually works, I will here shamelessly plug a journal article on the subject I wrote for Diplomatic History in 2012 (I hope Oxford Journals will forgive me for posting it). I still think it's one of the better pieces I've ever written.... Once out of the Senate, a version of the TPA legislation will have to also pass the House. Regardless of the final outcome, the TPA will reveal the deep divisions in both parties over trade (link).

What's amazing is how the debates over trade policy in the United States repeatedly descend to the some of the lowest forms of populist rhetoric. The TPA debate is already part of the 2016 Presidential election campaign as candidates, declared or otherwise, are asked to go on the record regarding their support for TPA. Depending on which way the wind happens to be blowing that day, candidates will declare themselves for or against (See story). What's more troublesome is how readily some of these candidates are willing to pander to anti-trade opponents. These days, it is far safer politically to be against trade liberalization than for it. It's also intellectually lazier! It's far easier to turn to the xenophobia of blaming foreigners for labor market woes than it is to make a more sophisticated case for trade; a topic I also dealt with in my post from a year ago.

As a reminder of the kind of simplistic nonsense that gets peddled about trade liberalization, I thought I'd post here a video that I like to show my students every fall. It's not without flaws, but it makes a strong point about the politics of trade liberalization (it happens to be funny too). The video features clips from the 2008 presidential campaign. As you watch the debate over TPA unfold in the weeks ahead, you might note how often we see more of the same....

Hillary's In!

Perhaps the worst kept secret on the planet was finally made official on Sunday; Hillary Clinton is a candidate for President in 2016.

It's hard to imagine what else can be written about Clinton after a long public career that has already cemented her place in history. There will be many questions about her campaign going forward, first among them whether she has learned from the mistakes she made in 2008. Based upon the video announcing her candidacy, the answer seems to be yes; a small-scale bus tour from New York to Iowa where she stumbled badly in 2008. But other questions loom as well:

Obama at the Summit of the Americas..... Bravo!

 I have to throw a bone to the president for his performance this past weekend at the Summit of the Americas in Panama City, Panama.

A quick scroll through the posts on this blog will show that I have not been especially complementary of Obama's foreign policy. In November of last year, I suggested that Obama's foreign policy suffered from Carter Syndrome. I have also worried about the perfect storm of foreign policy problems that seemed poised to overwhelm the last years of Obama's presidency. I've been much less critical of Obama's handling of environmental policy, particularly where the controversial Keystone XL pipeline is concerned. One can certainly levy the critique that Obama has failed to live up to expectations on issues like immigration and the environment, but I think that criticism needs to be measured against the level of opposition he's faced and his evident determination to tackle climate change in the time he has left. I've also expressed considerable sympathy for the challenges Obama (or any president) faces in being the leader of the most what remains the "indispensable country."

But this past weekend, at least, I began to think about how I'll miss his combativeness and ability to speak and think extemporaneously. 

Alberta as the 51st State?.... Ha!

I nearly spit out my morning coffee when I came across a story in the National Post about the possible secession of Alberta to become the 51st State in the Union (Link). I was even more surprised when I learned that this old ghost of an idea was being floated by a former employee of the respected strategic intelligence firm, Stratfor.

It is an idea that has been the subject of fear mongering by Canadian politicians since before Confederation in 1867 (admittedly stoked now and then by some equally nutty Americans), but one I actually thought had more or less been killed in the wake of the 1988 re-election of Brian Mulroney's Progressive Conservatives and the subsequent formalisation of free trade with the United States.

It sounds sexy, but few actually stop to consider whether such a move would be welcomed in the United States itself. Just for fun, let's take the idea seriously.....

Obama Makes Good.... Veto

This past Tuesday, President Obama made good on his threat to veto any Congressional measure aimed at forcing the construction of the Keystone XL pipeline. It was a veto that probably surprised no one since the President has been increasingly explicit about his willingness to warm up the veto pen. Since the measure has no chance of receiving the required 2/3 majority in both houses of Congress, this particular Keystone measure is dead.

More interesting is the open letter about Keystone XL penned by former NYC mayor, Michael Bloomberg, who is now the UN Secretary General's Special Envoy for Cities and Climate Change. In the letter, Bloomberg argues that proponents of Keystone XL should be thinking in terms of a larger bargain between the U.S. and Canada that included a major climate change initiative. It is an argument I've been making for more than a year (See link to February 2014 Post). Putting some kind of climate chance pact, cooperation, coordination, consultation mechanism,..... anything, on the table in conjunction with Keystone XL approval would grease the political skids for Obama to sign off. It would give him political cover in a period in which the economic case for Keystone XL is fading along with falling oil prices.

C'mon Man

Unfortunately, Canada's Ambassador to the United States, Gary Doer, doesn't think such a bargain is possible. Ambassador Doer claims that attaching some kind of climate change deal to Keystone XL would result in a morass of legal challenges to the package that would doom all of it. The problem with this rebuttal is that no one is talking about formal linkage of Keystone approval with a climate change initiative. Formal linkage would indeed be messy, which is why negotiators are loathe to engage in such. But, a bilateral proposal for climate change cooperation in advance of this December's COP 21 meetings in Paris would go a long way toward giving Obama breathing space to approve Keystone XL. The two issues need not ever be connected in a formal way.

At the end of the day, Keystone XL is just a piece of infrastructure. But, rightly or wrongly, it also happens to be infrastructure fraught with political symbolism about climate change. Hence, absent an overwhelmingly positive economic case, the President needs something to expand the win-set for him to approve it. I agree with Mayor Bloomberg that a bilateral climate change proposal is probably the best way to get Keystone XL built. However, I think the onus is on Canadian officials to drop the fiction that Keystone and climate change aren't connected and propose the two countries work on a joint proposal for the multilateral talks in Paris later this year.

Monarch Butterflies and the NAFTA

San Antonio, Texas is one of the most surprising cities I have ever been to. To be blunt, South Texas is generally what you might expect; arid, dusty, dominated by low scrub brush and tumble weeds. However, my first visit to the Alamo City about a decade ago blew me away. In addition to the attraction of the Alamo itself, the San Antonio Riverwalk that surrounds it is a wonderful urban oasis of canals, outdoor cafes, and local artists.

I was in San Antonio again last week, and was just as impressed with the city. However, San Antonio is significant in the history of the North American Free Trade Agreement as well. In October 1992, the final text of the NAFTA had been completed, and San Antonio became the site of an outdoor initialing ceremony designed, in part, to boost the economic bona fides of President Bush.

Mr. Prentice goes to Washington....

The number of long-time journalists with deep institutional and historical knowledge remaining at Canadian newspapers is dwindling, but one of my favourite observers is Graham Thomson, provincial affairs columnist for the Edmonton Journal. His commentary is an astute dose of reality about how Alberta functions politically. This past week, Alberta Premier, Jim Prentice made the latest of a long-line of high-profile trips to Washington, D.C. aimed at promotion and advocacy of the provinces interests in the U.S. capital. In an editorial Thursday morning Thomson repeated an observation he's made before about the many high-profile trips made by Alberta premiers to Washington, D.C.: it's all about politics at home!

It is a point that merits repeating when ever a Canadian politician, of any order of government, goes the the United States. It is also a point that will undoubtedly be repeatable for generations to come. Yet, Premier Prentice's trip to the Imperial Capital last week was different. While these are early days in Jim Prentice's leadership, he has thusfar demonstrated an unusual sophistication about the American political system and the challenges Canadians confront there.

How Keystone is like the Young and the Restless

Update: Thursday, January 28. Well, Republican Senators finally pulled it together on Keystone. There's still reconciliation with the House version of the bill, but Obama's veto pen is getting warmed up.


As those of you who have visited this blog before know, the Keystone XL pipeline is a regular topic of commentary here (in fact, it was the subject of my 3rd ever post). Yet, I increasingly liken advances in the plot line over this project to the minor advances that seem to come to television soap operas like the Young and the Restless. Now, I have to be pretty hard up to watch the Young and the Restless, but on those rare occasions that I manage to flip past it, neither the characters or the plot seem to have changed much, even over the course of a couple of years. Every once in a while, I spy a supermarket tabloid headline that says something about a major plot shift in Y&R, but not really. Stop paying your cable bill for 6 months, then tune in again, and you'll quickly pick up the story.

Sadly, the same could be said of the Keystone XL pipeline mess. Once in a while, I see a headline that suggests progress on getting Keystone closer to being built. But, not really. A few weeks ago, a Nebraska Supreme Court decision was supposed to have broken a log-jam. Apparently not. Monday's U.S. Senate vote on a new Keystone XL measure was yet another over-hyped event that promised to do the same. U.S. Congressional midterms last fall were supposed to change everything. An historic Republican majority in the House and a new GOP majority in the Senate were supposed to generally make the last two years of the Obama's presidency miserable, and perhaps alter the dynamics of this long-delayed project. That new political landscape was to have included an early legislative shot across the White House bow in the form of Keystone XL legislation.

The "Grexit"?

In case the list of things keeping you awake at night isn't long enough already, you might want to put Greece and the Euro Area back on your list of serious economic concerns. On January 25th, Greece will hold national elections. The mere fact that elections are being held is problematic, but the outcome might well be far worse.

2015 Will Not Be Kind to most Petro-states...

First off, Happy New Year! In addition to spending a little time with family over the holidays, I managed to catch up on some overdue reading. The falling price of oil repeatedly caught my attention. In the short run, the falling price is a doubled edged sword. Those who consume a lot of fossil fuels are going to see a short-run dividend. For example, I confess a great deal of satisfaction every time I fill up my car. Firms like FedEx, UPS, Union Pacific, CN Rail, and the airlines are all reaping the benefits of lower fuel costs.

Yet, there are significant danger signs ahead in 2015 if the price of oil continues to fall. On the one hand, the global oil glut is a supply story brought about by technological change; namely the deployment of fracking and directional drilling in so-called "tight oil" plays in the United States. In short, oil firms figured out how to get at previously inaccessible sources. However, the larger concern with falling oil prices for the global economy is a worrisome decline in demand. Sure, some of that decline is due to efficiency gains, primarily in rich countries. That's all great. However, declines in demand also suggest a worrisome slowdown in global economic activity that will be good for none of us in 2015.

However, what jumped out at me over the holidays was the profound pain declining oil prices are causing for the many petro-states who depend on oil revenues to keep the lights on or, more appropriately, subsidise the stability of the state itself. Rather than try capture what others have more articulately written and demonstrated, I offer up the links below for a stark snapshot of the pain 2015 may offer for a number of natural resource economies.

From Deutsche Bank (PDF)
From the Economist Espresso Application, January 2, 2015.
From the Wall Street Journal, December 10, 2014.(Note Norway's advantageous break-even position).
From Slate.com, December 11, 2014. (Note that Canadian production is included in these charts).

If you had a look at my previous post, you might wonder whether I think Canada is a petro-state? There have always been striking similarities between Canada and many resource-dependent developing countries. While the falling price of oil is unambiguously a major policy problem for Canada (and Alberta in particular), Canada is clearly NOT like Venezuela!!!!

That said, the expansion of Canada's oil sands developments in recent years has fuelled debates about the management of natural resource revenues, including apt comparisons with well-governed states like Norway whose sovereign wealth fund has become the envy of many countries. Bruce Campbell of the Canadian Centre for Policy Alternatives wrote an interesting analysis in 2013 explicitly comparing Canada with Norway in the management of oil wealth. One broad conclusion Campbell reaches is that Canadian governments should be more heavily involved in the oil business itself, including the establishment of a state-run-oil company and sovereign wealth fund. It is a recommendation worth wrestling with for lessons that could be applied to Canada, but Norway is a major exception to a broader rule that state-run oil companies are not very good stewards of natural resource wealth. Given Canada's track record of resource management, I'm not sure putting more of it in the hands of the state is the route to sustainability.