Cato Op-Eds

Individual Liberty, Free Markets, and Peace
Subscribe to Cato Op-Eds feed

I wrote last month that new regulations and taxes in California’s legalized marijuana regime are likely to result in a situation in which

a few people are going to get rich in the California marijuana industry, and fewer small growers are going to earn a modest but comfortable income. Just one of the many ways that regulation contributes to inequality.

Now the East Bay Express in Oakland offers a further look at the problem:

Ask the people who grow, manufacture, and sell cannabis about the end of prohibition and you’ll hear two stories. One is that legalization is ushering a multibillion-dollar industry into the light. Opportunities are boundless and green-friendly cities like Oakland are going to benefit enormously. There will be thousands of new jobs, millions in new tax revenue, and a drop in crime and incarceration.

But increasingly you’ll hear another story. The state of California and the city of Oakland blew it. The new state and city cannabis regulations are too complicated, permits are too difficult and time consuming to obtain, taxes are too high, and commercial real estate is scarce and expensive. As a result, many longtime cannabis entrepreneurs are either giving up or they’re burrowing back into the underground economy, out of the taxman’s reach, and unfortunately, further away from the social benefits legal pot was supposed to deliver….

Some longtime farmers, daunted by the regulated market’s heavy expenses, taxes, and low-profit predictions, have shrugged and gone back to the black market where they can continue to grow as they always have: illegally but free of hassle from the state’s new pot bureaucrats armed with pocket protectors and clipboards.

Not all the complaints in the two-part investigation are about taxes and overregulation. Some, especially in part 1, are about “loopholes” in the regulations that allow large corporations to get into the marijuana business and about “dramatic changes to Humboldt County’s cannabis culture, which had an almost pagan worship of a plant that created an alternative lifestyle in the misty hills north of the ‘Redwood Curtain.’”

But there’s plenty of evidence that regulations are more burdensome on newer and smaller companies than on large, established companies. Indeed, regulatory processes are oftencaptured” by the affected interest groups. The Wall Street Journal confirmed this just yesterday, reporting that “some of the restrictions [in Europe’s GDPR online privacy regulations] are having an unintended consequence: reinforcing the duopoly of Facebook Inc. and Alphabet Inc.’s Google.”

Several weeks ago, the United States and Korea reached an “agreement in principle” on an amended Korea-US Free Trade Agreement (KORUS FTA). This amendment process was minor enough that the Trump administration believed it could undertake it without having Congress vote on the changes (there will be a consultation with Congress on some tariff changes, as described here). Congress could object, as it does have the ultimate constitutional power over trade, but so far there are no signs that it plans to do so.

In an op-ed on the new KORUS, we described the result as follows: “the KORUS renegotiation looks like a minor tweak to U.S. trade relationships, rather than the wholesale ‘populist’ revolution that is sometimes indicated by Trump’s tweets.” In this blog post, we offer a more detailed assessment of the KORUS changes that have been reported  so far.

However, keep in mind that there is no final text of the amended agreement yet, so our analysis is necessarily a bit tentative. Specific wording can be important to understanding the implications of a provision, and there may be additional items that have not been reported yet. (In addition, statements by President Trump suggest the deal may be held up by other issues).

The outcomes of KORUS 2.0 can be grouped into two categories: (1) new issues that were not covered by the existing KORUS, and were negotiated as something akin to side deals to the talks, and (2) amendments or modifications to the current text. We examine each in turn.

With regard to the side deals, the biggest (and most negative) economic impact will arise from the export restrictions on steel that Korea agreed to. Pursuant to these restrictions, Korean would cap steel exports to the U.S. at 70 percent of the average volume from the past three years on a product-by-product basis. This was in exchange for a permanent exemption of the Trump administration’s Section 232 “national security” tariffs on steel. The impact of these quotas/tariffs will be some degree of price increase for U.S. consumers, with the amount of the increase depending on exactly how the measures are implemented. In terms of the impact on Korea, Korean producers may actually benefit, now that they have avoided the tariffs. Their sales to the U.S. will now be at higher prices, and they may find other markets for their steel to replace the lost volume in the U.S.

There are also provisions on currency manipulation. Media reporting on the currency provisions suggests they are non-binding. It sounds like the provisions are similar to those agreed to in a side letter to the Trans Pacific Partnership (TPP). Adding these currency provisions is not particularly signficant, as the Trump administration is mostly just carrying over an Obama-era policy. However, the Trump administration may be pushing for binding currency provisions as part of the renegotiated NAFTA. This would be a bigger deal, as there have never been such detailed provisions on this issue in trade agreements, and U.S. attempts to promote such provisions in additional agreements would have significant implications. The specific terms will be important for determining the impact. 

Turning to the amendments and modifications to the existing KORUS, the outcomes on automobile exports and truck imports stand out.

Under the existing KORUS, U.S.-based auto manufacturers can export up to 25,000 vehicles (per manufacturer) to Korea per year that will be deemed compliant with Korean safety standards simply by meeting U.S. standards. Through the renegotiation, this quota has now been increased to 50,000 vehicles per manufacturer. On its face, this is a good market-opening provision, and a positive development for increasing access to the Korean market. However, the real economic value is not clear. In 2017, U.S. passenger vehicle and light truck exports to Korea totalled only 52,607 units. Ford and General Motors shipped fewer than 10,000 vehicles each. Given the low volume of U.S. exports in these products, increasing the quota may not have much impact. (And to put these figures in perspective, Canada leads the way as a destination for U.S. exports with 912,277 units, and China is second at 267,473 units.)

With regard to light trucks, it appears that the administration took a more protectionist tack, extending until 2041 a 25% U.S. tariff that was supposed to be phased out by 2021. While there will be no immediate impact, because Korea does not currently export trucks to the U.S., this change could delay any future export plans. It has been suggested that the reason Korea has not yet sold light trucks on the U.S. market is because the existing tariff has effectively blocked the possibility of exports. In an interview with CNBC, USTR Robert Lighthizer said: “The Koreans don’t ship trucks to the United States right now and the reason they don’t is because of this tariff,” and “They were going to start next year – we would have seen massive truck shipments. So, that’s put off for two decades.” This modification can therefore be seen as an attempt by the Trump administration to prevent trucks produced in Korea from being sold in the United States. However, even if the tariff had been removed as scheduled, any trucks produced for the U.S. market after 2021 may very well have been produced in the Korean companies’ existing North American factories. As a result, the claim that “massive truck shipments” have been blocked is a bit misleading.

Other reported KORUS renegotiation results sound minor, although, again, a full assessment will have to wait for the release of the text. For instance, there appears to be a new agreement on environmental testing standards for autos. This could refer to Korea’s Fuel Economy and Greenhouse Gas Standards, which are updated every five years by the Korean Ministry of Environment. Through the negotiations, Korea has agreed to base the update of these standards for the 2021-2025 period on “global trends, including U.S. standards” and increase the number of eco-innovation credits available for auto imports to meet the fuel economy and greenhouse gas requirements. In addition, there was an agreement on harmonizing the testing requirements on gasoline engine vehicle exports so that these products will not have to be tested twice. As a result, U.S. emissions testing will be seen as equivalent to Korean testing requirements.

And Korea agreed to include American companies in a “national drug reimbursement program,” which offers premium pricing for certain new drugs. This change has been pushed by the Pharmaceutical Research and Manufacturers of America (PhRMA), which has argued that U.S. companies have been negatively affected by Korea’s low drug prices.   In addition to these changes, vague announcements were made with regard to introducing more transparency to certain dispute procedures, and changes to Korean customs inspection procedures.   Overall, from what we know so far, the KORUS renegotiation looks like a minor tweak to U.S. trade relationships, rather than the wholesale revolution that is sometimes indicated by Trump’s tweets. That is probably for the best. However, KORUS has been a somewhat minor point on the Trump administration’s trade agenda, so we should not take too much comfort from this. It may be that the administation simply wanted to focus its more aggressive trade actions on other countries. The U.S. trade relationship with each country is different. The two big items that are coming next on the agenda are the NAFTA renegotiation and the U.S.-China trade relationship. The resolution of these will tell us more about whether the administation can figure out a way to put together a coherent trade strategy that does not unravel decades of trade liberalization.

Last week the White House announced that Richard Clarida will be nominated to become Vice Chair of the Federal Reserve Board. More than a month ago, Clarida became the front-runner for the role. He is widely seen as a centrist and a pragmatist holding mostly conventional views on monetary policy. Mostly.

As Vice Chair, Clarida will be the third pillar of the Fed’s new leadership, joining Chair Jerome Powell and recently announced incoming NY Fed President John Williams. Having been an economics professor at Columbia University since 1988 and a Global Strategic Advisor at Pacific Investment Management Company (PIMCO) since 2006, Clarida provides a complement to both Powell’s largely business background and Williams’ career inside the Fed.

With a couple of mutual research interests, Clarida and Williams will likely work well together. They’ve both explored the natural rate of interest (r*) — Williams is the coauthor of the widely cited r* estimates and Clarida has examined natural rates from an international perspective. Another area of mutual interest is price level targeting. As I have noted previously, Williams is an advocate of the Fed adopting such a target while Clarida has also explored its merits for monetary policy.

At first blush this may be concerning, given the shortcomings of price level targeting. However, the evolution of Clarida’s post-crisis thinking on monetary policy, including towards price level targeting, shows that he may be persuaded by the superior merits of nominal GDP level targeting.

In 2010, Clarida presented a paper at the Boston Fed conference, Revisiting Monetary Policy in a Low Inflation Environment. The paper discussed what economists had learned throughout the 2000s, with a particular focus on what they ought to learn after years of low inflation (a subject with renewed saliency in recent years).

He also discussed the large-scale asset purchases of the Fed’s quantitative easing program, casting doubt on much of the literature of the day — which tended to find positive, but limited effects of such purchases on reducing bond yields. Clarida, on the other hand, thought large-scale asset purchases could be very robust. He had two main points, one flawed and one overlooked.

The first was that a determined central bank, prepared to buy the requisite amount of securities up to the outstanding stock, could always put a ceiling on the yield (or, put another way, a floor underneath the price) of the securities it targeted. Now, this proposal puts the central bank squarely into the credit allocation business, which is a role it ought to avoid.

However, the second, subtle point in his framework that should not be ignored is that Clarida recommends the central bank fully commit to an outcome rather than announce various mechanical steps. This goal-oriented strategy suggests that Clarida may indeed become receptive to the benefits of nominal GDP level targeting — a point to which I will return.

But why did Clarida suggest focusing on securities’ yields at the time, rather than consider changing the central bank’s nominal target?

He explained that adopting a price level target, a possible alternative to the Fed’s then “stable prices” mandate and now 2% inflation growth rate target, was not a time consistent policy. That is to say, a central bank would initially commit to level targeting when its policy was below the trend line but then fail to run an expansionary policy to reacquire that trend line. Clarida believed that, while attractive in theory, a central bank could not credibly commit itself to future actions. Modern Fed parlance would call this forward guidance and, to Clarida, that was not a sufficiently robust strategy because it lacked the “proper commitment technology” to satisfy markets and the public that the central bank would indeed execute its promises in the future.

But by 2016, as the recovery from the Great Recession proved to be weaker than expected, Clarida’s thinking about forward guidance and the viability of a level target had changed.

At a Brookings conference early that year, which focused on whether the US was ready for the next recession, Clarida said that despite the fact that textbooks and economic theory suggest forward guidance should not work in practice, it, in fact, does. He also suggested, or perhaps wondered, if this meant a price level targeting strategy could work (his slides are here).

He rightly pointed out that a price level target would have the advantage of making up for past monetary policy failures that inflation growth rate targeting lacks. Level targeting corrects for the bygones problem in growth rate targeting, making up for past mistakes rather than embedding those errors in current policy.

Incidentally, this was not the first time he had suggested a price level target for the Fed.

In a Global Perspectives note at PIMCO published in 2014, Clarida endorsed a price level target. He believed such a target would be an improvement for the new Yellen Fed over the Evans Rule, which had been in effect for more than two years. Promising to leave rates at the zero lower bound until either inflation was above 2.5% or the unemployment rate was below 6.5% was not enough to guide policy going forward. These thresholds were not goals and therefore were insufficient anchors for monetary policy (indeed the Fed abandoned the Evans Rule the following month).

Clarida saw the weakness in the Fed’s communication strategy of putting thresholds on inflation and unemployment and proposed a price level target as an alternative.

As mentioned, a price level target is not the proper alternative for the Fed’s target because it can make a central bank procyclical and thus amplify, rather than dampen, the business cycle. A price level targeting central bank runs the danger of tightening policy because of an adverse supply shock and over-easing because of a productivity boom. Nevertheless, Clarida was right to criticize the kind of open-ended policy that characterized the Evans Rule and this kind of thinking will be a welcome addition to the Board.

Clarida now seems predisposed to three views about monetary policy that could significantly influence the Fed’s actions going forward:

  1. That a central bank fully committed to reaching a nominal target is superior to one focused on mechanical operations.
  2. That employing forward guidance is indeed an effective tool for conducting monetary policy.
  3. That level targeting can make up for past errors in monetary policy in a way that growth rate targeting cannot.

Combined, I think these views point to Clarida being more amenable to a nominal GDP target than even he may presently admit. After all, nominal GDP level targeting requires two things of a central bank to work in practice: first a central bank must credibly pledge to keep nominal GDP growing along a stable trend line and then it must be prepared to do whatever is necessary to achieve that level of nominal growth.

Clarida has already expressed the importance of both of these elements. In addition, he has repeatedly shown a willingness to let his thinking evolve when presented with new information. Therefore, he may yet be persuaded on the shortcomings of price level targeting in favor of a superior option.

Clarida may have said little about nominal GDP targeting to date — but with his nomination, the Fed may be getting a nominal GDP target advocate for the future.

[Cross-posted from Alt-M.org]

Democrats are plugging new energy into an old idea: a federal “Jobs Guarantee” program. Senator Cory Booker previously introduced legislation for a pilot in high unemployment communities. Now Senator Bernie Sanders will announce a plan guaranteeing a job or training paying $15 an hour and health-care benefits to every American worker “who wants or needs one,” in a host of public infrastructure, care giving and environmental upkeep projects.

The scheme, seemingly based on a recommendation from the Levy Economic Institute, comes with grandiose purported benefits. It would, we are told, eliminate involuntary unemployment, deliver a living wage, boost GDP, reduce the cost of recessions, raise labor market standards, reduce environmental degradation, reduce racial inequality, and much else besides. If it sounds too good to be true, that’s because it is. There are severe problems with this idea, which can be loosely grouped under three “c’s”: costs, crowd out and corruption.

Costs

The Levy Economic Institute calculates up to 16 million could take part in such a program today (including the unemployed, those working part time seeking full time work and individuals currently inactive who might move into the labor market). Given the federal government would have to pay $15 an hour for full time jobs, plus benefits equal to 20 percent of wages, total labor costs per worker would be $37,440 per year. That’s before the cost of the materials for the programs and administration of the program itself. Even assuming some opt for part-time positions, and ignoring the non-labor program costs, we are talking about a gross cost of up to around 2.4 percent of GDP, significantly higher than the existing Medicaid program (2 percent of GDP).

The net cost on these assumptions will be lower, of course. People who take jobs will require less in welfare payments and pay some back in taxes. Some might wisely consider it a risk for their employment fortunes to be tied to the whims of politicians and their willingness to fund this program, and so remain in the private sector. But even taking this into account, and assuming the policy generates the macroeconomic bounty that the Levy researchers expect, they still think the annual net cost will be between 0.8 and 2 percent of GDP, with the program employing up to 10 percent of the workforce. That would in itself be a huge new commitment to finance at a time when the long-term fiscal outlook is already dire, and the short-term deficit already expected to balloon to over 5 percent of GDP in the coming years.

Crowd-out

In reality, the fiscal costs are likely to be much, much higher, and the economic welfare losses even more significant, because in the labor market and broader economy, a public jobs guarantee program would significantly crowd out productive private sector activity. This type of policy will radically alter behavior of both workers and businesses, and so the supply and demand for labor.

The Census shows that, among those who worked in 2016, 70+ million Americans earned under $32,500 (the full-time job guarantee salary would be $31,200). Yes, not all of these would seek out positions on the jobs guarantee program. But a large proportion would, especially those employed in uncertain roles with low levels of job security.

In fact, some even paid more than $31,200 might consider leaving their jobs to pursue guaranteed roles if they perceive better working conditions or an easier worklife (asked under what conditions someone would be fired from such a role, the Levy Institute paper suggests that you would be sacked for failing to go to work, but that your performance would not be judged by “private sector ‘efficiency criteria’”, for example.) It’s not inconceivable then that over 25 percent of the labor force could find itself part of the scheme.

This crowd-out is likely to be particularly acute in low productivity regions, and (ironically) after economic downturns. A nationwide jobs guarantee program paying $15 an hour will be particularly attractive to workers in low wage regions, and by setting a de facto wage floor the program will prevent private investment in regions on the basis of cheap labor.

Though no doubt there would be some demand spillovers from well-paid jobs, the net consequence is highly likely to be weaker private sector job creation in poor regions, which has been the experience of countries such as Britain with a nationwide minimum wages and public sector national pay bargaining. Proponents of the scheme see “higher labor standards” as a good thing, but absent productivity improvements, policies which raise labor costs significantly will reduce the quantity of workers demanded.

There’s good reason to expect the policy will reduce the efficiency and productive potential of the economy too. Taxes will eventually need to be raised to cover the net cost of the program. In infrastructure and care giving provision, costs will rise – because nobody would now work in these directly substitutable sectors for less than the wage and conditions offered in the job guarantee program. This will waste resources, and there’s highly likely to be overinvestment in lots of relatively low value ventures and programs to ensure workers are employed, especially given the explicit aim is to provide employment rather than deliver projects at low cost.

Throwing resources at regions with higher levels of unemployment and after recessions too will work directly against market signals and deter the mobility of labor (in geographic and industrial terms) and capital to its most productive uses given prevailing market conditions. This is important: yes, employment is highly likely to have some positive externalities; but the real driver of better living standards over time are productivity improvements, discovered by market-based activity. 

Proponents of this policy seem to put an enormous weight on the idea that time out of the labor market has huge scarring consequences which could be ameliorated by any type of temporary employment. But the literature on this shows that temporary jobs do not provide the workers with skills to improve longer-term labor market outcomes.

Corruption and incentives

As if all these consequences were not bad enough, such a program will be ripe for corruption and political interference at the government, provider and individual level. Senator Sanders’ plan would be administered by the Department for Labor, with local and state governments submitting projects to regional offices for consideration. There’s a huge question mark on whether projects will be considered on economic grounds, when there might be an incentive for make-work schemes to aid particular politicians or indeed to put resources towards “public good” causes or NGOs more in line with the ethos of the governing party. For Democrats this might be for environmental issues. For Republicans it might be, say, for a wall on the southern border.

NGOs and local public bodies themselves will have incentives to apply for federal funds for projects that would otherwise have occurred anyway, and to maximize the number of applications. Pork barrel projects would proliferate. What is more, at the individual level, the guarantee coupled with the purported unwillingness to judge worker performance on a commercial basis will incentivize low levels of work effort on the margin.

Conclusion

The Jobs Guarantee then is an extremely large and costly endeavor, which would have major economic consequences and risk a large federal politicization of the labor market and public project delivery. 

The US does have serious labor market issues to contend with - not least depressed labor participation and a weak productivity outlook - but are things really so bad that they require such a risky and extensive policy response?

Well-paid jobs and low levels of real unemployment are outcomes desired by all. But attempting to achieve that through this program amounts to cracking a nut with a sledgehammer, undermining what matters far more for living standards: efficiency and productivity. 

This morning in Jesner v. Arab Bank, the Supreme Court split 5-4 along conventional ideological lines to confirm that it is up to Congress, not the judiciary, to decide whether and when American courts should entertain international human rights cases against foreign defendants. It thus continues the course of its 2013 Kiobel v. Royal Dutch Petroleum case, about which I wrote here at the time

Today the U.S. Supreme Court unanimously and decisively buried the misguided, decades-long hope of some lawyers and academics that they could turn the Alien Tort Statute (ATS) into a wide-ranging method of hauling overseas damage claims into American courts. All nine Justices agreed with the Second Circuit that the statute does not grant jurisdiction for our courts to hear a controversy over alleged assistance in human rights violations outside the U.S. against non-U.S. plaintiffs by a non-U.S. business. A majority of five justices reiterated and relied on our law’s strong traditional presumption against extraterritoriality, that is to say, presumption against applying the law to actions that take place in other countries. While parting from this reasoning, four concurring justices nonetheless endorsed a view of ATS as applicable extraterritorially only to very extreme misconduct comparable to piracy, and also as sharply limited by considerations of comity with foreign sovereigns.

It is a good day for a realistic and modest sense of what United States courts of justice can successfully do, namely: do justice within the United States.

But in Kiobel, as Kenneth Anderson noted in the Cato Supreme Court Review that year, the Court ducked the question it had originally agreed to decide: may foreign corporations be sued in U.S. courts under the ATS, or only individuals? The correct answer is that Congress, not the courts, should decide. Issues of foreign affairs are peculiarly the province of the political branches, which can weigh (and take responsibility for) the dangers of engendering friction with foreign sovereigns by extending liability (Jordan, an important U.S. ally, has for years been riled by the attempt to go after Arab Bank over handling transactions, including some in New York, that allegedly facilitated terrorist acts abroad.) 

The only time Congress chose affirmatively to create such a cause of action, in a 1991 statute providing torture victims a right to sue over abuse abroad, it placed significant limits on the right, among which was providing that only individuals could be sued. Parallel restrictions should be read into other, unenumerated causes of action under the ATS, said Justice Anthony Kennedy in his opinion for the majority today; that means that unless Congress says so, the statute would enable holding individual wrongdoers liable but not imputing their liability to an organization. Writing separately in partial or full concurrence, Justices Gorsuch, Alito, and Thomas would have gone further to make clear that courts should simply not get into the business of inventing causes of action in this area, especially given the ATS’s history as an early American enactment meant to reduce rather than exacerbate diplomatic tensions. 

Not too many years ago, whole sectors of American legal academia were besotted with notions of “universal jurisdiction” in which misbehavior taking place in Africa, Latin America, or Southeast Asia could be sued over in American courts – in practice, often, in certain West Coast federal courts that welcomed such suits. The Court’s retreat from that proposition has been steady and prudent. Despite the dissent by Justice Sonia Sotomayor, no one has immunized business miscreants against anything. The Court has simply made it clear that if the United States courts are to become a sort of human rights policeman to the world, it is Congress that will need to decide to fit them out for that task. 

 

 

Toronto Police Chief Mark Saunders said that there is no evidence that yesterday’s “van incident,” where Alek Minassian murdered 10 people and injured 15 others on a busy sidewalk with a van, was a terrorist attack.  To count as a terrorist attack, Minassian’s motivations must have been political, religious, or social in nature beyond simply a desire to terrorize or murder others.  Minassian’s motives are so far unclear with much speculation regarding his social awkwardness and possible anti-women opinions but, so far, little surrounding his political or religious opinions.  This could change as police and investigators uncover new facts.

Many in media and government, prompted by Minassian’s mass murder, are commenting on terrorism in Canada but with little context.  By using the methods employed in my recent terrorism risk analysis for the United States, I’ve found that terrorism is rare in Canada.  Assuming that investigators will eventually find that Minassian’s mass-murder is not terrorism, as they currently claim, then the annual chance of being murdered in a terrorist attack on Canadian soil over the last 25 years was about one in 60.4 million per year.  The annual chance of being injured in a terrorist attack on Canadian soil during that time was about one in 7.4 million per year.

Data and Methodology

This post examines 25 years of terrorism on Canadian soil from 1993 through April 23, 2018.  Fatalities and injuries in terrorist attacks are the most important measures of the cost of terrorism. The information sources are the Global Terrorism Database (GTD) at the University of Maryland, the RAND Corporation, and others.  I excluded three fatalities counted by the GTD as they were the terrorists themselves.  I further grouped the ideology of the deadly attackers into four broad ideologies: Islamists, Anti-Muslims, anti-government, and Unknown/Other. GTD descriptions of the attackers, news stories, and wikipedia were my guide in grouping the attacks by ideology. The grouping by ideology was easy as there were so few terrorist attacks in Canada from 1993 to the present.  The number of Canadian residents and non-terrorist murders in each year comes from Statistics Canada.

Terrorism Risk in Canada

Terrorists have murdered 14 people on Canadian soil from 1993 through April 23, 2018.  Islamists murdered 3 of the victims, an anti-government terrorist murdered 3, suspected terrorists of an unknown ideology murdered 2, and 6 were murdered by an anti-Muslim terrorist named Alexandre Bissonnette in a shooting at a Quebec mosque last year (Figure 1).  Of the 63 terrorist attacks in Canada during that time, according to a wide definition of the term “terrorist” in the GTD, only 7 resulted in a fatality.  In other words, 89 percent of terrorist attacks in Canada during the last 25 years killed nobody.

Figure 1

Murders in Canadian Terrorist Attacks by the Ideology of the Attacker, 1993-2018

 

Sources: Global Terrorism Database at the University of Maryland, RAND Corporation, ESRI, and author’s calculations.

Although most of the recorded terrorist attacks targetted small groups in Canada, like Muslims or the police, it is useful to get a sense of the relative danger by looking at the annual chance of being murdered by a terrorist inspired by each ideology.  The annual chance of being murdered by an Islamist in a terrorist attack was the same as that of being murdered by an anti-government terrorist: about one in 281.7 million per year.  The annual chance of being murdered by a terrorist with an unknown ideology was about one in 422.5 million per year.  The greatest risk, but also still tiny, was being murdered by Alexandre Bissonnette in his Mosque attack last year at one in 140.8 million per year over the 25 years. 

There were 114 injuries in terrorist attacks on Canadian soil from 1993 through April 23, 2018 (Table 1).  Terrorists with unknown or other ideologies caused almost 68 percent of those injuries.  Alexandre Bissonnette, the anti-Muslim terrorist, was personally responsible for 17 percent of all injuries in terrorist attacks during this time in Canada.  Islamist terrorists were responsible for about 11 percent of injuries while anti-abortion and anti-government terrorists were responsible for 4 and 2 percent of all injuries, respectively. 

Table 1

Injuries in Canadian Terrorist Attacks by the Ideology of the Attacker, 1993-2018

  Injuries Annual Chance of Being Injured Percent of All Injuries Unknown/Other

77

1 in 10,973,614

67.5%

Anti-Muslim

19

1 in 44,472,016

16.7%

Islamist

12

1 in 70,414,026

10.5%

Anti-abortion

4

1 in 211,242,077

3.5%

Anti-government

2

1 in 422,484,154

1.8%

Total

114

1 in 7,412,003

100%

Sources: Global Terrorism Database at the University of Maryland, RAND Corporation, ESRI, and author’s calculations.

Comparison to Murder

Fatalities and injuries in terrorist attacks are rare so a relevant comparison to non-terrorist murder puts the terrorism danger into perspective.  There were about 14,807 murders in Canada from 1993 through April 23, 2018.  Because the number of murders is not reported for 2016-2018, I assumed that the number of murders for each of those years was the same as the number in 2015.  The annual chance of being murdered outside of a terrorist attack was about one in 57,000 per year from 1993 through 2018 – about 1,058 times greater than the chance of being killed in a terrorist attack.      

Conclusion

There is a small chance of being murdered in a terrorist attack in Canada over the last 25 years.  By comparison, the annual chance of being murdered in a terrorist attack in the United States over that time was about 25 times greater than in Canada.  Similarly, the annual chance of being murdered in a terrorist attack in Canada also appears to be lower than in Europe.  The chance of being murdered in a non-terrorist murder in Canada was over 1000 times greater.  Alek Minassian’s horrific mass murder does not appear to be a terrorist attack based on the information available at this time, but if it does turn out to be terrorism then it would be the deadliest attack on Canadian soil since December 6, 1989, when Marc Lepine murdered 14 and injured 14 others in an attack inspired by his anti-feminism.  The murder or death of innocent people is tragic no matter the circumstances and the perpetrator should be punished to the fullest extent of the law.  Regardless, Canadians can at least take some comfort in the fact that the chance of being murdered in a terrorist attack in Canada is small in absolute terms, relative to the residents of other developed nations, and compared to the chance of being murdered in a non-terrorist homicide.     

 

 

 

 

Pages