Who’s Down with TPP

It aint your grandpa’s trade agreement. Though the proposed Trans-Pacific Partnership is attended by the usual chorus, featuring competing refrains of “International Trade Took My Job” versus “International Trade Got me a Better Job, plus some Sweet Deals at Walmart,” the controversial aspect of TPP isnt the opening of borders through the elimination of tariffs. It’s about strengthening the power of corporations over national governments, and limiting governments – democratic or otherwise – in their ability to regulate industry.

A relatively minor story just out of Congress serves as a good illustration. The House Agriculture Committee voted to repeal a US labeling law that requires meat to specify its country-of-origin. What’s interesting is why the committee moved to eliminate the law: not because they thought country-of-origin information was superfluous or irrelevant to consumers; but rather because the World Trade Organization decided that the labeling law discriminated against Canadian and Mexican firms. If the US fails to repeal the law, Mexico and Canada will be permitted to retaliate, and that will be costly.

Ignoring whether these labeling laws are actually good or bad for US consumers – we focus instead on the process. An international tribunal made a decision, and Congress is now likely to respond by changing US laws – not for the interests of their electorate (as if!), but without regard to their interests.

TPP goes even further. It would create new supra-national tribunals, in which firms could sue governments for their failure to respect TPP’s provisions. Prevailing firms could effectively collect their “lost profits” from taxpayers. And the tribunals would not be staffed by independent judges with lifetime appointments – but rather by corporate representatives on a rotating basis. Today you’re a plaintiff, tomorrow you’re a judge, and next week you’re a plaintiff again. Nice work if you can find it….

Tariffs have already been all-but eliminated across international borders by existing trade agreements. Modern-day trade agreements like TPP are much more concerned with dispute resolution processes and harmonization of national laws, to smooth things out for multinational corporations. That in itself isnt a bad thing. In past decades, the US pushed to make commercial laws uniform across the fifty states. The resulting Uniform Commercial Code has helped to facilitate interstate commerce.

But TPP would go even further, and may too much restrict the latitude of governments. For example, TPP takes aim at banking regulations. While we could all probably get on not knowing whether our pork chop hails from Texas or Manitoba, we should not be thrilled to see US banking reforms – passed in the wake of the 2008 financial crisis – undone.

Free trade is good – and freer is usually better. That the parties to a transaction may be based in different towns, states or countries isnt terribly important to the analysis. If everyone acts according to their individual interests, the net result is usually that everyone is better off. While things usually are that simple, circumstances arise when people, through their governments, should restrict trade to further a greater good.* And the problem with TPP is that it promises to run roughshod over democratic processes, by which individual nations tailor their laws according to their own values and their perception of the national interest.

 

Refs:

http://en.wikipedia.org/wiki/Trans-Pacific_Partnership

http://www.thenation.com/article/168627/nafta-steroids#

http://krugman.blogs.nytimes.com/2015/05/19/the-mis-selling-of-tpp/?module=BlogPost-Title&version=Blog%20Main&contentCollection=Opinion&action=Click&pgtype=Blogs&region=Body

http://www.washingtonpost.com/blogs/plum-line/wp/2015/04/30/battle-rages-over-key-obama-trade-policy/

http://www.bloomberg.com/politics/articles/2015-05-15/warren-claim-that-trade-bill-could-undermine-dodd-frank-is-right

http://news.yahoo.com/house-consider-repeal-meat-labeling-law-071204979–finance.html

http://www.azlyrics.com/lyrics/naughtybynature/opp.html

 

* For example, it doesnt much matter whether a factory releases carbon dioxide in Canton, Ohio or in Guangdong, China – the impact on global warming is the same. While people in one country might reasonably accept a dirtier local environment as a cost of having more local industrial jobs, their decision to not regulate carbon impacts people in all countries. And so it’s quite reasonable for other countries to limit trade with the polluting country, as a means of protecting their own environment.

Another example: Left to themselves, laborers tend to organize and demand better pay and working conditions. Therefore there is little pressing need for western countries to impose their own labor standards on the developing world. However some third world governments systematically harass and suppress labor movements in an effort to artificially maintain a competitive advantage. It is reasonable to respond with trade restrictions if only to ensure a level playing field, if not to promote human rights.

 

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The Welfare of Children

Welfare is, and has always been, about promoting the welfare of children – not adults. The name of the US’s first nationwide program – Aid to Families with Dependent Children – says it all. It wasnt a program for poor people generally, but for poor families with children. Its predecessor – numerous smaller programs run at the state and county level, collectively referred to as “Mother’s Pension Programs” – also had the wellbeing of children – not mothers – as its central purpose.

For the past forty years, the American debate on welfare has lost sight of what should be its organizing principle: improving the lives of impoverished children. America never got past Reagan’s preoccupation with the “welfare queen.” Even the welfare reform signed into law by Bill Clinton was crafted without respect to what should have been its overarching priority. For decades American policymakers have been asking the wrong questions about AFDC, and its successor, TANF (Temporary Aid to Needy Families), as well as numerous other welfare programs, such as Medicaid and Food Stamps (SNAP).

When scrutinizing welfare programs, Americans have become overly concerned with what economists refer to as “the moral hazard problem.” Like any form of insurance, social insurance is expected to impact behavior. Without car insurance, for example, you would drive more carefully. Without homeowners insurance, you might never use your fireplace. Lacking health insurance, you might never ski. In the absence of unemployment insurance, you might deal with your boss more deferentially. And indeed, without welfare, poor people with children might be more inclined to work, or to put in longer hours at work. These are all instances of “moral hazard” – of people behaving differently because they have insurance.

Despite the moral hazard problem, we are almost always far better off with insurance than without it. It is the folly of conservatives to be preoccupied with the work ethic of poor mothers, who might take welfare as an opportunity to stay home and look after their children. They consistently fail to ask the most important question: whether welfare improves the lives of children.

At last, sanity is being restored to the welfare debate. This week, the New York Times ran an op-ed penned by the Chairman of the White House Council of Economic Advisers. He discusses, approvingly, several new lines of research that supply an empirical basis for the notion that welfare does indeed benefit children. The best and latest scholarship shows that welfare helps children live longer, healthier lives, obtain more years of education, and earn more. Welfare has a positive impact on such diverse phenomena as low-birth weight, high school and college completion rates, teenage mortality, standardized test scores and crime.

All along, the objective of welfare wasnt to make things easier for parents, but to alleviate the harm that poverty inflicts on children. It is encouraging to see this very basic insight embraced by the president’s chief economic adviser, and to see the welfare debate move back toward its proper area of concern.

 

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the NYT op-ed: http://www.nytimes.com/2015/05/11/opinion/smart-social-programs.html?emc=edit_th_20150511&nl=todaysheadlines&nlid=32816889&_r=0

 

 

GOP Immigration Priorities Revealed

Where does the GOP really stand on immigration? Indeed, they arent entirely monolithic – some conservatives say they’d grudgingly allow a pathway to citizenship for some unauthorized immigrants; others say they’d like to see the US (somehow) expel all of its unauthorized immigrants – some 3.5% of the US resident population and 5% of the workforce – if only by elven magic and pixie dust.

Conservatives are all but unanimous in their opposition to President Obama’s common-sense, pro-family reforms, which exempt millions of unauthorized immigrants from deportation. Many, including House Speaker John Boehner, have maligned Obama, claiming that he “cannot be trusted to enforce the laws as written” – implying that a GOP president would do things differently – that if the GOP had its druthers, US immigration policy would see a dramatic change.

Economists employ a useful concept: “the revealed preference.” Recognizing that some people (particularly politicians) will lie about their true mindset, we are wise to ignore their words when we have their actions to reveal their actual preferences. Revealed Preference Theory is in fact a whole lot more involved – but this facet of it closely tracks the popular notion that talk is cheap – and that walking the walk – as distinct from talking the talk – is the true indicator of someone’s heartfelt policies and beliefs.

So where do Republicans really come down on immigration? We might start by taking a look at how the number of unauthorized immigrants living in the US changed during the tenure of the last GOP president. When Bush Duh took office in January 2001, the unauthorized immigrant population was about 9.4 million. In 2003, it passed 10 million. During 2005, it surpassed 11 million. And in 2007, Bush Duh’s seventh year in office, the number of unauthorized US residents reached what remains an all time high of between 12 and 13 million – more than double the number in 1996.

Bush Duh’s presence in the White House had no impact on the steadily increasing number of unauthorized US residents. The only reason why their numbers finally plateaued and began to decline after 2007 is because a weak US economy made the US less attractive: fewer people tried to enter the US illegally, and a fair number of those already in the US departed.

Since Obama took office, and the Great Recession receded, the number of unauthorized immigrants in the US has leveled off at about 11.5 million. It may surprise some to discover that while Clinton and Bush Duh each oversaw periods during which the number of unauthorized immigrants increased by the millions, Obama is the first president in recent history under whom their numbers have roughly held steady.

But we arent here to discuss Obama’s immigration priorities – our aim is to discern the GOP’s real stance. And quite conveniently, it just so happens that yesterday the GOP passed its very first budget resolution in more than a decade. Given all the GOP tough-talk on illegal immigrants, you’d expect there to be a whole lot of new spending for DHS border security and immigration enforcement, right?

Nope. As it turns out, in its brand new budget resolution, the GOP didnt even maintain spending on immigration enforcement and border security at current levels. By cutting the benefits of most federal employees, the GOP, for all their hand-wringing, and their recent government shutdown threat, would effectively reduce the resources available for immigration enforcement and border security!

Le plus ca change. The GOP did nothing while millions illegally entered the US under Bush Duh’s watch. And just yesterday, in its budget resolution, the GOP revealed its preference for reducing the resources available to the Department of Homeland Security. So what does this say about conservatives’ real immigration priorities? – It reveals that immigration, for conservatives, isnt a priority at all.

 

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No Freedom to Discriminate

The US Supreme Court seems poised to end state bans on gay marriage in the few states that still do not permit it. Under the 14th amendment, states are not allowed to deny “equal protection of the laws” to any person. As distinctions between traditional marriage and same-sex marriage wither under scrutiny, state bans on same-sex marriage become ever more apparently a bald denial of equal protection, and will very likely be declared unconstitutional by the Court when it renders its decision in the coming months.

But just as one form of discrimination is about to be stamped out, another is trying to emerge. Such discrimination occurs in a commercial setting – when, for instance, a gay couple goes to a baker for a wedding cake, and the baker refuses. (This is analogous to racial discrimination from the Jim Crow era, when a black person seeking a room in a whites-only hotel could be turned away by the manager.) Unlike bans on gay marriage, which are perpetrated by the government, this form of discrimination is committed by private citizens – and there’s no federal law against it.

While the Bill of Rights and the 14th amendment secure individual rights against federal, state and local governments, they are generally inapplicable to the rights we hold with respect to each other. That’s why the US needed the Civil Rights Act of 1964 to end apartheid. Under federal law, before the Civil Rights Act, the proprietor of a shop could turn away any prospective customer or employee for any reason whatsoever. One could choose to serve and-or hire blacks only, whites only, Catholics only, Jews only, etc. – and the US Constitution had (and still has) nothing to say about it. While the Constitution forbids governments from maintaining whites-only buses, or blacks-only universities, it allows private parties to do as their conscience (or lack thereof) dictates. It is because of the Civil Rights Act – not the Constitution – that private parties cannot discriminate on the basis of “race, color or creed” in the course of operating a business.

While red states lag far behind blue states in virtually every socioeconomic measure, they are great innovators of bigotry and intolerance. The Supreme Court’s unfortunate decision in Hobby Lobby gave conservatives a new not-so-bright idea. The Court held that closely-held corporations can refuse to provide their employees with health insurance coverage for birth control, if doing so ran afoul of their “religious beliefs.” In other words, a corporation’s Constitutional “religious freedom” takes precedence over a federal law requiring them to provide insurance coverage for family planning.

Enter the “Religious Freedom Restoration Acts” (RFRAs) now working their way through state legislatures across the country. On their face, they seem innocent – as was the original RFRA passed by Congress in 1993, and signed into law by Bill Clinton. The idea was to give people the right to refuse certain impositions on the part of the government, when they conflicted with their religious beliefs. But a few red states got the notion to expand the application of these laws to private parties as well. And so if a gay couple asks a baker to bake them a cake, the baker might be able to rely on a state RFRA to refuse. The analog to Hobby Lobby is unmistakable, as it should be. Conservatives thought they found a new lipstick for their pig: by dressing up bigotry in the garb of religious freedom, maybe they could sneak it past the courts, and engender a whole new era of discrimination.

Indiana and Arkansas seemed bent on passing RFRAs that facilitated this new form of discrimination. And then something remarkable happened: corporate America rose up in opposition, and the GOP in both states were cowed into amending their laws so that bigots could not rely on them to discriminate.

The US Supreme Court has yet to hear a case on whether one can invoke ones religious beliefs to discriminate against others on the basis of their sexual orientation. Many states afford no protections for gays from discrimination. And Congress has thus far failed to pass a Civil Rights Act for gays. But it is heartening to see this new form of bigotry beaten back by public opinion. The LGBT community assuredly needs a federal Civil Rights Act affording them full protection from commercial discrimination, nationwide. And the road to that destination just got a bit smoother.

 

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Refs:

http://en.wikipedia.org/wiki/Religious_Freedom_Restoration_Act

http://en.wikipedia.org/wiki/Employment_Non-Discrimination_Act

4 articles with comprehensive coverage of RFRAs: http://www.washingtonpost.com/blogs/govbeat/wp/2015/04/01/the-twisted-history-of-how-religious-freedom-laws-confused-everybody/

http://www.usatoday.com/story/news/politics/2015/04/02/arkansas-religious-freedom-bill/70831330/

http://www.huffingtonpost.com/2015/04/02/asa-hutchinson-arkansas-rfra_n_6995826.html

http://www.usatoday.com/story/news/nation/2015/04/02/indiana-religious-freedom-law-deal-gay-discrimination/70819106/

http://www.hrc.org/resources/entry/employment-non-discrimination-act

 

Nuts over Water in California

California’s worsening drought has gained national and international attention. But what most reporting fails to convey is that California has the all water it needs for double, if not triple, its present population of 40 million – even in the worst drought in recorded history. That’s because the water shortage is not driven by the demands of the resident population, nor by industry generally. California’s water problem is an agriculture problem. Parsing it further, it is an almond and alfalfa problem.

As a matter of economics, the government is treating water like a public good, instead of like the commodity and production factor it truly is. Though water in California is getting scarcer, the price farmers pay for it is holding steady. And so instead of adapting to less water-intensive crops, they have gone right on producing the most water-intensive crops on the planet, planting more and more acres of them.

California’s 40 million people and non-farm businesses combined consume just 20% of the state’s water supply. The rest goes to agriculture. 10% of the entire California water supply goes to almonds alone. Another 10-15% goes to alfalfa. The math could not be weirder: alfalfa and almond production use more water than all of California’s residents and non-farm businesses combined. If Sacramento passed a law that made it illegal to water almond orchards or alfalfa fields, the water crisis would end that same day. You could double the size of Los Angeles too, and you’d still have enough water for every other purpose.

The problem with almond trees is that they are especially thirsty: it takes about 2100 gallons to make a pound of shelled almonds. By comparison, it takes just 300 gallons to get a pound of chicken, or 160 gallons for a pound of corn. In a healthy market economy, as water becomes more scarce, it will also get more expensive. Almond production should become less and less profitable, and shift to locales with cheaper water supplies. Water-stressed areas will adapt by planting crops that need less water. But California farmers are not asked to pay market prices for the water they consume. When deciding which crop to plant on a given field, the price of water simply doesnt factor in. And so, perversely, as the drought has worsened, almond production has increased – to nearly double what it was 20 years ago.

The State Water Project (SWP) is a massive state-run complex of reservoirs, aqueducts and dams that distributes water throughout the state, to cities and farmers alike. Its pricing scheme tells the whole story. Farmers in the central valley pay SWP about $50 per acre-foot of water. (3 acre feet are about one million gallons.) As water becomes more scarce, SWP does not auction it off to ensure that it goes to its most productive use. Instead, farmers either get water at a fixed price, or they dont, based on seniority. And so farmers keep on planting almond trees because they yield the best return per acre – because SWP makes water cheap for them. By comparison, Los Angeles pays SWP about $300 per acre-foot of water out of the same system. At that price, almonds cannot be grown. Desalinization plants produce water for about $2000 per acre-foot. At that price, farming is impossible.

It is fairly observed that almonds are California’s top agricultural export, more than double wine by gross sales. But agriculture is a very small part of a large, diverse state economy, accounting for less than 2% of California’s gross state product (GSP). Almond production itself is just 0.2% of GSP. But politicians are timid in their dealings with the powerful agribusiness lobby. People on the coasts are instead asked to conserve and pay for outrageously expensive desal projects and-or environmentally messy new dams and reservoirs, simply because politicians are afraid to ask farmers to pay the true price of the water they are using.

Agriculture in the Central Valley doesnt need to come to a dramatic end. But it does need to change, simply because the present practice is unsustainable. Taking shorter showers and washing your car less often is not going to do it. Spending billions on desal so that farmers can send almonds to China and alfalfa to Japan is sheer foolishness. We can be heartened that even in the worst drought in California history, there is still plenty of water to go around. It seems almost too obvious to observe that, particularly in California, water has value – and the state must let the markets reflect that value, to let economic actors make decisions based on real-world scarcities. Water welfare for farmers must end.

 

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Refs:

http://www.slate.com/articles/technology/future_tense/2014/05/_10_percent_of_california_s_water_goes_to_almond_farming.html

http://www.ecology.com/2014/08/29/water-intensive-food-impact-california-drought/

http://westernfarmpress.com/bullish-almond-market-reflects-concerns-over-crop-size-water

http://westernfarmpress.com/tree-nuts/almond-supplies-will-continue-tight-even-big-2013-crop

http://westernfarmpress.com/tree-nuts/growers-balance-record-high-price-2014-harvest-against-uncertain-water-prospects-next-year

http://www.mercurynews.com/science/ci_25859513/nations-largest-ocean-desalination-plant-goes-up-near

http://www.cdfa.ca.gov/statistics/

http://en.wikipedia.org/wiki/California_State_Water_Project#Controversy_and_modern_issues

http://www.latimes.com/business/la-fi-california-almonds-20140112-story.html

http://www.washingtonpost.com/national/health-science/wests-historic-drought-stokes-fears-of-water-crisis/2014/08/17/d5c84934-240c-11e4-958c-268a320a60ce_story.html

http://en.wikipedia.org/wiki/Economy_of_California#/media/File:Gross_Domestic_Product_of_California_2008_%28millions_of_current_dollars%29.svg

http://www.nytimes.com/2012/10/14/magazine/californias-central-valley-land-of-a-billion-vegetables.html

 

Iran Dealings

The Field Guide has taken a hard line on Iran’s nuclear weapons program. Iran cannot be permitted to develop a nuclear weapon, and US military force should be applied, as a last resort, to prevent it. But reciprocally, this means that any prospective deal with Iran must be pursued to the fullest, given the alternative.

A deal with Iran isnt just about blocking its path to a nuclear weapon. It should be seen as part of a larger plan to integrate Iran, politically and economically, back into the community of nations. The removal of sanctions will lead to the considerable enrichment of Iranians, raise many from poverty, and expand the ranks of its middle-class and wealthy. It will create and strengthen ties across borders, between Iranians and economic actors in other countries.

In the long-term, as a populace grows in wealth, political actors will become more wary of pursuing policies that degrade living standards. This dynamic will prove a far better safeguard against war than the agreement itself. When it was announced that a framework for a deal had been struck, people in Tehran spontaneously took to the streets in celebration – a fact not missed by Iran’s rulers, who are already under pressure to reach an agreement. Should a final deal be reached, and sanctions be lifted, the pressure to uphold it will only increase over time as Iranians grow more prosperous.

Even the world’s poorest countries can readily develop nuclear weapons under the right conditions. Governments like North Korea’s persist with little internal resistance because they control virtually all of the country’s resources. Sanctions only reinforce the status quo, because they undermine industry, which naturally rises up as a counter to centralized state power. By comparison, totalitarian regimes like those in Iran and China will inevitably yield power to an increasingly affluent populace, by the same historical processes that brought democracy to places as diverse as England, France, the US, Singapore, South Korea and Taiwan.

And this is why the lifting of sanctions should not be seen as a point of weakness for any prospective Iran deal, but as the key to long-term peace and security. Of course, any deal must provide for inspectors’ unfettered access to sites of interest. And the West must retain the power to reimpose economic sanctions should Iran fall out of compliance; and also to impose sanctions in response to Iran’s sponsorship of terrorism. While a deal is to the mutual advantage of all parties, it should be based on verifiability, not trust. But over the long haul, the deal will become self-sustaining, as international trade and shared prosperity make war too expensive to fathom.

 

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Bergdahl Rules

The successful effort to obtain the release of captured US Army Sergeant Bowe Bergdahl set a high water mark for idealism, and highlights the best of American governance. Though the subtleties of law and principle implicated in Bergdahl’s case are easily manipulated by cynics, and thus misapprehended by the unwitting many, a great deal of good, and a fine precedent, has nonetheless proceeded from a difficult situation.

The evidence strongly suggests that Bergdahl deserted. While he’s entitled to the presumption of innocence, for our purposes, we’ll assume that Bergdahl will be convicted of desertion, and that the Obama administration expected as much as they worked to obtain his release, ultimately paying a significant price. It’s also reasonably assumed that the five Guantanamo prisoners, whom the US gave up in exchange for Bergdahl, are indeed dangerous, simply because the Taliban wanted them. And so the threshold issue is why the US would give up so much to rescue a deserter, who has likely been brought back to the US for the sole purpose of standing trial, to thereafter serve a lifetime sentence in a military prison.

The rationale was best expressed in the terse phrasings of Army Chief of Staff Anthony Odierno: “It was always a high priority that every soldier deployed to Afghanistan would return home. We will never leave a fallen comrade behind.” Or as a US Admiral put it, “If a man goes overboard, we will go and get you – we wont stand around asking if you jumped.” The commitment of the US military to every one of its servicemen has no exceptions for poor performance. The policy of leaving no man behind has no asterisk after it.

Some have raised the issue of the US policy against negotiating with terrorists. However the Taliban has never been classified by the State Department as a terrorist organization, neither under the Bush nor Obama administrations. The US went to war against Afghanistan not because the Taliban – its rulers – were terrorists, but because they were harboring terrorists. The Taliban is better regarded as an especially brutal, repressive regime (and-or insurgency), in the vein of Hitler, Stalin, Pol Pot, Pinochet, Trujillo, etc. And the US has exchanged prisoners with many such regimes in the past, including Nazi Germany, the USSR, and even the Confederate States of America. Right-wing hysteria notwithstanding, the Obama administration’s decision to negotiate with the Taliban does not set a precedent or mark a departure from longstanding US policies.

A particularly silly criticism of the deal is that the US paid “too high a price” for Bergdahl – that after years of negotiating, the US in the end caved in and sent five enemy combatants for a single US soldier. Such critiques are particularly frivolous, advanced as they are in a factual vacuum, by people who were not privy to the negotiations. More absurd is the “problem” such critics seem anxious to head off: the US placing too great a value on the lives of its soldiers.

A more interesting issue is President Obama’s decision to flaunt the National Defense Authorization Act for Fiscal Year 2014, which mandates that 30 days notice be given to Congress before any prisoners are transferred from Guantanamo. That law, which Obama signed into effect, poses a separation of powers issue, and there is a very good chance that it is an unconstitutional usurpation of executive authority by Congress. (Obama said as much in his signing statement.) While in other countries the courts could resolve the matter with an advisory opinion, the US Supreme Court only has jurisdiction over live “cases and controversies” – i.e., the president cannot inquire as to whether a law is constitutional – he must make his own decision and act without the benefit of the Court’s opinion. And in such circumstances, very few conlaw scholars take the extreme viewpoint that the president must “faithfully execute” laws that seem to run afoul of the Constitution.

It would have been far easier for the Obama administration to do what some on the right-wing lunatic fringe suggested: try Bergdahl in absentia, obtain a verdict of guilt, and disown him. (Though it’s naive to imagine conservatives rallying behind the president as Bergdahl’s corpse was dragged through the streets by his captors.) Instead of taking an easy way out, the Obama administration stood fast to principle: faithful to the policy of bringing every man home; and to the presumption of innocence; and the commitment to due process, which affords the accused the opportunity to face his accusers and participate in his own defense. While the price paid for Bergdahl may have been dear, in the end it wasnt one soldier that the US was paying for, but a set of principles that go to the foundation of the republic.

 

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