My thoughts, at forbes.com.

When President Obama approved a plan to withdraw combat forces from Iraq this summer, it was based on the assumption that a newly elected government would be in place by the time Americans headed home. Fourteen months later, that assumption is exploding but the plan remains the same.

The delay and messy aftermath of the Iraqi election mean it may be months before the next government is formed, even as tens of thousands of American troops pack to leave. Yet Mr. Obama has not had a meeting on Iraq with his full national security team in months, and the White House insists that it has no plans to revisit the withdrawal timetable.

Two comments:

1. I bet the administration ends up delaying the withdrawal, despite what the White House says now.

2. I hope I am wrong about point #1. I think we should exit now, regardless of what is happening in Iraq. The occupation is incredibly costly, and Iraq is unlikely to resolve its political differences until after we leave.

A new working paper by Michael Roberts and Wolfram Schlenker finds that

the current US ethanol mandate requires that about 5 percent of world caloric production from corn, wheat, rice, and soybeans be used for ethanol generation. As a result, world food prices are predicted to increase by about 30 percent and global consumer surplus from food consumption is preducted to decrease by 155 billion dollars annually. 

In other words, the mandate needs to generate at least $155 billion worth of annual benefits from reduced global warming to pass a cost-benefit test. Since ethanol use appears to increase GHG emissions, the mandate fails big time!

Before the U.S. adopts costly new policies to reduce global warming, it should eliminate existing policies that contribute to global warming and make no sense from any other perspective.

The measure – set to take effect in late July or early August – would make it a crime under state law to be in the U.S. illegally. It directs state and local police to question people about their immigration status if there is reason to suspect they are illegal.

This law is incredibly misguided. Enforcement will be selective, inflaming ethnic and racial tensions. Police resources are better utilized pursuing crimes like homicide, rape, and theft. And the measure’s impact on immigration will be modest in any case.

The only way to reduce illegal immigration is to expand legal immigration; punitive, “supply side” measures will not work so long as the wage gap between Mexico and the U.S. persists.

A “trilemma” is like a dilemma, only there are three things to choose from and you can have just two. The current debate over post-crisis financial regulation suggests we face such a trilemma: We can choose any two of the following, but not all three: 1) efficient capital markets 2) no bailouts to big banks and 3) a depression-free economy.

From the 1980s until 2007, we essentially opted for one and two. Financial markets operated with more freedom than at any time since the 1930s and the Federal Reserve stood ready to cut interest rates if asset prices tanked. But the idea that big banks might be able to get new capital from the Treasury was scarcely even contemplated. Choosing one and two resulted in a global financial and economic crisis worthy of the name depression.

In the aftermath, congressional Democrats are claiming that we can have three out of three. In effect, the bill introduced to the Senate by Christopher Dodd purports to prevent future depressions without sacrificing the efficiency of our financial markets or committing taxpayers to future bailouts of the banking system. This trifecta is not credible.

This is from Niall Ferguson and Ted Forstmann.

I agree that the regulation taking shape in Congress will not solve the trilemma, but I think it can be solved. The right approach is less government, not more: no Fed, no stabilization policy, no deposit insurance, no financial market regulation, and so on.

Absent the moral hazards created by policy, private actors will be more cautious about risk. Absent the false assurances of regulation, financial market participants will exercise due diligience and diversification. The economy will experience ups and downs but not depressions, and financial crises will occur but not seriously damage the rest of the economy.

This view is fantasy, you say? No, it’s a description of the U.S. economy – roughly – from its inception to the founding of the Fed in 1914. The policies that generate moral hazard were all but absent, and U.S. economic performance was  impressive. Recessions and financial panics occurred, but none on the scale of the Great Depression or the Great Recession.

Just a coincidence? I think not.

It would be hard to make this stuff up:

The Securities and Exchange Commission is the sheriff of the financial industry, looking for crimes such as Bernard Madoff’s Ponzi scheme, but a new government report obtained by ABC News has concluded that some senior employees spent hours on the agency’s computers looking at sites such as naughty.com, skankwire and youporn as the financial crisis was unfolding.

But wait; it gets better:

One senior attorney at SEC headquarters in Washington spent up to eight hours a day accessing Internet porn, according to the report, which has yet to be released. When he filled all the space on his government computer with pornographic images, he downloaded more to CDs and DVDs that accumulated in boxes in his offices.

Read the rest here. Of course, the soon-to-be-adopted financial regulation will fix all this stuff.

As the NFL Draft gets under way, one of the hot topics inside the league is the growing number of top prospects who have admitted smoking pot or have been caught doing so.

The article is interesting throughout. A few thoughts:

1. Libertarians, while supporting marijuana legalization, would nevertheless say the NFL should be free to impose whatever drug-testing it wants.

2. The NFL might continue to ban marijuana, even if it becomes legal, because it believes the fans prefer a “drug-free” league.  Yet a change in legal status would probably undermine that view.

3. The contrast between the NFL’s marijuana policy and its alcohol policy is stark. No one denies that many players consume large quantities of alcohol, nor that this consumption can affect performance on the field if excessive. Yet the league does nothing about it.

4. The growing legality of medicinal marijuana may push the league to modify its policy.

5. The quoted players believe marijuana helps their performance indirectly by alleviating pain, allowing them to relax, and stimulating their appetite so they can gain the appropriate weight.

A libertarian friend has asked me if I agree with point 1 of Aaron Powell’s definition of libertarianism:

Individuals have rights it is impermissible to violate.

My answer is that I neither agree or disagree; I just think this statement adds nothing to Powell’s otherwise excellent definition of libertarianism.

Why? Because the statement is an assertion without content. Nothing prevents, say, egalitarians from agreeing with the statement and then adding,

The set of invioble rights includes a minimum income, state-of-the-art health care, and summer vacations.

Libertarians would respond, of coures, by arguing that if a society enforces egalitarian rights, the economic pie will shrink drastically. But this is a consequentialist argument, not a rights-based argument.

Indeed, what libertarians really mean when they say thinks like “individual have invioble rights” is that if a society respects particular individual rights (such as ownership of one’s property and person), then other good things happen. Powell’s point 1 is just a short-hand for this claim.

But if the argument for libertarian policies is that some “rights” have better consequences than others, why not eliminate the middle man and just discuss consequences directly?

Airlines world-wide scrambled Wednesday to move millions of passengers grounded by a five-day ban on European flights due to a cloud of volcanic ash, and industry officials said the shutdown had cost them at least $1.7 billion and showed the need for more unified regulation

Huh? I do not see the case for “more unified regulation.” Country-by-country decisions seemed appropriate in this situation because conditions differed across countries. Unified regulation might have helped the airlines being hurt by shutdowns push for wider bans so as to avoid losing business.

WASHINGTON—Conservative and liberal justices on the Supreme Court dueled verbally over whether a student religious group has a constitutional right to receive state college funds while excluding homosexuals and others who violate its beliefs.

The case, argued Monday, stems from San Francisco, where the University of California’s Hastings College of the Law says its policy requires that student groups seeking benefits such as school funding or preferred access to meeting rooms admit any interested student.

Hastings refused to accept the Christian Legal Society as a registered student group because, starting in 2004, the organization has held members to a “statement of faith” prohibiting “fornication, adultery and homosexual conduct.”

The society sued, contending that the Hastings antidiscrimination policy violated its First Amendment right to associate with those it chooses and to select members and officers committed to promoting its beliefs. Lower courts agreed with Hastings, setting up a Supreme Court argument with both sides represented by lawyers who gained prominence during the administration of President George W. Bush.

Libertarians would resolve this dispute by getting rid of public universities. The First Amendment constrains governments, not private parties, so Hastings’ anti-discriminiation rules would raise no constitutional issues if imposed by a private university.