Economics and Alaska
To leave a comment click on the word "comment" at the end of each post.
Click here for Atom feed
Race for World Bank President
The Fight for Free Trade
Australian economics blogging
Canadian economics blogging
UK economics blogging
Viennese economics blogging
Sports economics blogs
Policy Essays and Papers
Where are visitors to this page?
(Auto-update daily since 12-27-04)
Agreement at the WTO talks in Geneva
The WTO website statement about the agreement is here: "Round-the-clock meetings produce ‘historic’ breakthrough". Here is the text of the agreement: "Text of the ‘July package’ — the General Council’s post-Cancún decision".
Forbes carries an Associated Press report on some of the elements of the agreement: "Update 5: WTO Negotiators Reach Tentative Accord".
The highest agricultural import tariffs will face the biggest cuts, although no figures have yet been agreed. Nations will have the right to keep higher tariffs on some of the products they consider most important.
Tariffs on industrial products will also be cut according to a formula, but the exact details have yet to be established. Developing countries will have longer to make the changes.
The deal also approves the launch of new negotiations on trade facilitation - "further expediting the movement, release and clearance of goods" by streamlining customs procedures.
Developing countries in particular have been congratulating themselves for forcing issues onto the agenda that they say were ignored by rich nations in the past - such as the devastating effect of U.S. cotton subsidies on producers in Africa."
Saturday at the WTO
Exhausting, marathon negotiations in Geneva, reports news.com.au: "No result in marathon WTO debate". And it can't go on forever. Logistical issues may put a stop to it by Sunday:
Switzerland is due to celebrate national day tomorrow [Sunday - Ben], raising security concerns as thousands of people flock to Geneva, while many delegates, who have already postponed flights home, are due to leave in the next 24 hours.
"It's going to end this afternoon, whatever happens," said one trade diplomat on condition of anonymity..."
Richard Waddington and Patrick Lannin also report that things are coming together in this Reuters dispatch (from just after noon in Geneva - many hours ago now): http://www.reuters.com/newsArticle.jhtml?type=businessNews&storyID=5835204&src=rss/businessNews">"Breakthrough on WTO Trade Pact Seen Close".
"This is the beginning of the end for (farm) subsidies. Export subsidies will be eliminated first," Amorim added.
Brazil leads the so-called G20 group of nations which played a key role in the failure of last year's talks in Cancun, where they mounted fierce attacks on rich countries' farm subsidies..."
Max Zawicky evaluates Kerry
A view from my left: "KERRYNOMICS" Zawicky likes the fair trade talk, but doesn't believe it. Clinton fooled him once, and its not going to happen again.
"Kerry is making fiscal commitments -- balanced budgets, tax cuts and program expansions -- that defy the laws of arithmetic." But, "A friend tells me to cheer up -- that we can expect better in regulation of the environment, labor, reproductive rights, and other areas. Plus better judges. He's right."
Zawicky's not happy with Democratic party economic orthodoxy: "FED ACHE". Read Galbraith's review of the Lawrence Meyer book for more moderate left critique of the Democratic mainstream view.
Economists and eugenics
The latest issue of the Journal of Economic Perspectives came today. Bernard Saffron's column "Recommendations for Further Reading" has this interesting item:
Was Kerry's acceptance speech protectionist?
Geitner Simmons identifies a protectionist slant in Kerry's acceptance speech, arguing that, since the speech is designed to have a "centrist tone" it signals that the Democratic party "now regards protectionism as well within the policy mainstream." See "That which must not be named".
I didn't see the speech, but I'm curious to see what Kerry said. The text of the speech is here: "Text of John Kerry's acceptance speech" Here are some selections:
We're told that outsourcing jobs is good for America. We're told that jobs that pay $9000 less than the jobs that have been lost is the best that we can do. They say this is the best economy that we've ever had. And they say anyone who thinks otherwise is a pessimist...
What does it mean in America today when Dave McCune, a steel worker I met in Canton, Ohio, saw his job sent overseas and the equipment in his factory literally unbolted, crated up, and shipped thousands of miles away along with that job? What does it mean when workers I've met had to train their foreign replacements?
America can do better. So tonight we say: help is on the way...
...So here is our economic plan to build a stronger America:
First, new incentives to revitalize manufacturing.
Second, investment in technology and innovation that will create the good-paying jobs of the future.
Third, close the tax loopholes that reward companies for shipping our jobs overseas. Instead, we will reward companies that create and keep good paying jobs where they belong – in the good old U.S.A.
We value an America that exports products, not jobs – and we believe American workers should never have to subsidize the loss of their own job.
Next, we will trade and compete in the world. But our plan calls for a fair playing field – because if you give the American worker a fair playing field, there's nobody in the world the American worker can't compete against..."
Friday at the WTO
Delegates received a 20 page draft framework for continuing negotiations this morning ("WTO Mediators Make Final Bid for Accord") . This text is available at the WTO site: "Second draft of post-Cancún decision for the General Council".
Negotiations begun on Thursday continued until 4 AM this morning. An informal 2 1/2 hour "Heads of Delegation" meeting started at 7 AM - shortly after the new document was circulated. The meeting is described here: "Members comment on new draft as chair warns of overload".
Channel NewsAsia reports on the new document here: "WTO lays out last-ditch compromise to unlock global trade talks". Peter Gallagher has some early thoughts on the draft here: "Second Grosser text ". Here is some early analysis from the High Plains Journal as well: "Details Of WTO Proposal ".
African countries are reported to be pleased with the result: "African Nations Happy With U.S. Agreement".
It also instructs WTO Director-General Supachai Panitchpakdi to work with other
international agencies, like the World Bank and the International Monetary Fund, to "direct effectively existing programs and any additional resources toward development of the economies where cotton has vital importance."
Most importantly, the agriculture agreement as a whole - if approved - would see an end to export subsidies globally and major cuts in domestic subsidies paid by rich nations...
He [Ousmane Ngom, Senegalese minister of trade - Ben] acknowledged that the African nations also had to make some compromises. They had originally demanded that cotton be treated separately from other agricultural issues, and that African nations be compensated until subsidies were eliminated..."
At the same time, the US had insisted that India should commit itself to reducing its aggregate support for agriculture from 5 per cent allowed now to nil.
The current round of negotiations has seen India using deft footwork, switching allegiances to further its interests.
It was only on Thursday that it was seen leaving its familiar perch among the "developing countries" to join the so-called NG-5 (Non-group-5) with the US, the European Union, Brazil and Australia. The NG-5 is described as such because of their conflicting interests."
They finally agreed on a draft for future negotiations under which Europe's promises to eventually end export subsidies would be matched by a US vow to reduce its huge domestic supports for American farmers and an Australian promise to study whether state trading enterprises for commodities such as wheat were hidden forms of government subsidies..."
Working until 4:00 a.m. on Friday, Robert B. Zoellick, the United States trade representative, reached an agreement to cut subsidies for such crops as corn, rice, wheat and soybeans. He also reached an accord with four cotton-producing countries in West Africa for eventual cutbacks in subsidies paid to American cotton growers...
In exchange for reducing agricultural supports, the wealthy nations are asking the developing nations to reduce their tariffs on manufactured goods. That issue was left in general terms for more precise negotiations in later talks. Mr. Zoellick so far has failed to get significant concessions to open up new markets for American agricultural and industrial goods."
Revised 9:30 PM Juneau time
Thursday at the WTO
Agricultural negotiations, dominated by the US, EU, Brazil, India, and Australia, (the so-called "Five Interested Parties," or "FIP") continued until midnight Wednesday or early Thursday morning. The five have now turned their ideas over to New Zealand Ambassador Tim Groser, the WTO's chief agricultural negotiator. Elizabeth Becker of the New York Times reports that the U.S. made significant concessions during the evening "U.S. and Europe Reach Informal Agreement on Agriculture".
While officials were reluctant to describe specifics of the discussions or even describe them as an agreement, they did say that the United States seemed willing to put off some of its more contentious demands on agricultural subsidies and, instead, offer to make specific cuts in other areas..."
This Reuters dispatch indicates that a number of countries feel "left out" of this process ("Fate of World Trade Talks Hangs in Balance"):
The WTO held a "Heads of Delegation" briefing meeting late last night about 10 PM (the "stormy meeting" of the Reuters dispatch?). The meeting is described in a WTO release this morning: "Supachai welcomes input from the Five as a key first step".
But Ambassador Groser did hint that progress had been made on how to deal with subsidized export credit, food aid and state trading enterprises, in a way that would match the proposal to get rid of export subsidies by a negotiated date. He also said complaints about the unequal treatment for developed countries’ sensitive products (which are described in some detail in the current draft), and developing countries’ provisions for their “special products”, would be amended in response to the complaints.
There is now a real chance of “saving the Doha Round”, he said. Meanwhile parallel talks are underway on the cotton initiative, Ambassador Groser reported..."
A final agreement is due sometime before the General Council meeting ends on Friday. Various news stories talk about a mid-night deadline, but one recent story is talking about a meeting running into early Saturday. The framework document was originally expected on Tuesday or Wednesday. Yesterday it was hoped to have something early Thursday. Now delivery is late Thursday night or Friday morning. This late delivery doesn't give much time for delegations to review it, debate it, or consult with their home governments. If there is much controversy about the delivered document, there may not be any time for further revision. Representatives of the FIP countries have been briefing other groups privately on the Wednesday night outcomes on Thursday, pending release of the final document.
This EUPolitix story notes that the EU negotiator, Pascal Lamy, must defend the proposals before a meeting of EU foreign ministers. Ministerial approval is needed for the EU to sign off on any agreement. Some EU states, including but not limited to France are concerned that too many concessions may have been made: "EU to quiz Lamy on new WTO deal" This meeting was originally scheduled for Thursday, but this story from Channel NewsAsia reports that the meeting has been postponed until Friday morning, because of the delays in preparation of the framework document: "Tempers fray as WTO talks rumble on without result".
I'll close out today's post with some notes on Paul Blustein's story in tomorrow's Washington Post ("5 Powers Agree at WTO on Farm Talks").
Likely Kerry Administration Trade Posture
Matt Yglesias reports that Laura Tyson, former Clinton, current Kerry, economic advisor says that Kerry would pursue pro-free trade policies. Despite some of the things he has said on the on the campaign trail:
Wednesday at the WTO
(Our story so far...) Remember that the General Council of the World Trade Organization (WTO) is meeting this week to develop guidance for negotiators on how to proceed on the current round of negotiations on liberalization of the world trade. Last September in Cancun, the trade ministers of the member nations met to try to do this, but they failed to produce agreement. Upcoming elections in the US and transitional events in the EU, will make it hard to hold a similar meeting for many months. A failure to reach agreement now may hurt, or effectively end, the current round of negotiations. The Council meeting ends Friday.
A draft set of guidelines, floated on July 16, has been the subject of intense negotiation since then. A revised set of guidelines had been expected today. Currently (Wednesday - 12:30 PM Alaska local time and night in Geneva) the revised version is expected very late tonight or early tomorrow (Thursday, July 29) morning. Here is the WTO web page on the status of the negotiations: "Chairs report progress as hours tick by":
“All delegations are engaged and we’re making worthwhile progress in all areas,” General Council chairperson Shotaro Oshima told heads of delegations at the latest meeting called to keep negotiators informed about the various consultations taking place.
But above all, a revised text for the July package awaits the section on agriculture, with the subject’s “facilitator”, Ambassador Tim Groser of New Zealand, hoping to produce a new draft later in the day, members were told.
Many delegations said they were encouraged by the progress and were willing to wait another half day for a revised text if that could lead to agreement. But several warned that enough time should be left for those who are not directly participating to be able to have a say, and for them to seek reactions from their capitals."
The Forbes website carries an Associated Press ("Update 2: WTO Countries Work on Farm Trade Logjam") story, which indicates that agriculture is the hold-up, and that much of today's activity revolved around meetings between Brazil, India, Australia, the EU and the US, on this issue:
The World Trade Organization's 147 members are frantically working to reach an agreement by the end of the week to clear the way for sweeping changes in world trade. But mediators said disagreements on farm trade liberalization are holding up the talks.
"It depends on the (agriculture) session, which is ongoing," WTO Director-General Supachai Panitchpakdi told reporters. "I think there's a limit to their time."...
Five major agricultural producers continued to meet for a second day Wednesday, hoping to find a solution to open up the international farm trade.
Trade ministers from the United States, the European Union, Brazil, India and Australia met at the U.S. mission in Geneva..."
As a result Benin on Friday proposed a revised, more assertive draft.
A copy of the text, obtained by AFP, states: "WTO members are committed to take a specific, urgent and ambitious actions to address trade distortions in the cotton market."
It also declares that any agreement on cotton must be implemented on an early harvest basis starting in 2005.
"The text presented by Benin on cotton is the minimum for us African countries. If it's not accepted, we won't sign" the overall agreement, the African delegate said.
Several WTO experts, however, felt the Benin document had no chance of being accepted by the United States..."
The revised framework document is due tomorrow. As noted on the WTO website above, that doesn't leave much time for input by other parties, or for touching base with the government at home. Note also that the EU trade ministers have agreed that they will approve any document before their negotiator can sign off on it.Will the chances for an agreement improve if the negotiators drop specifics and draft a more general document? Richard Waddington of Reuters ("Mediators' WTO Pact Plan Could Slip"):
But others said that it would be difficult for Brussels Trade Commissioner Pascal Lamy, who is already under attack by France for having conceded too much, to keep on the table a firm commitment to end export subsidies when all other issues were reduced to generalities..."
That, in turn, could adversely affect the WTO's "crown jewel" -- its system for arbitrating trade disputes among nations, according to Peter D. Sutherland, a former director-general of the organization. In a Financial Times column this month, Sutherland asked whether the global trade system can continue to function well "if the institution within which it is embedded -- and on whose rules its judgments are based -- ceases to command the respect of governments and businesses."
Revised 12:30 PM July 28
How private radio stations came to the UK
Dr. Madsen Pirie reports in this post from the Adam Smith Institute's blog: "We loved the pirate stations"
Josh Barr reports in the Washington Post ("Athletes Make the Grade Sooner by Failing First") that:
OMB expected to report record deficit, maybe Friday
Anna Willard and Caren Bohan report for Reuters that the Office of Management and Budget (OMB) will project a record budget deficit for 2004. The deficit should be $50 billion more than in 2003.
The report was scheduled for OMB release on July 15, but it has been delayed. The authors speculate it may come this Friday, after the Democratic convention ends. "Bush Seen Projecting Record Deficit"
Although it looks like the deficit has increased by $50 billion from last year to this, the administration is expected to argue that the OMB release is good news, since the last OMB projection of the increase in the deficit from 2003 to 2004 was much larger.
Should FDA approval of a drug preclude lawsuits?
Alex Tabarrok at Marginal Revolution argues that FDA approval of a drug should preclude lawsuits (unless the drug manufacturer has lied or is negligent): "Double Jeopardy Disaster"
Celia Dugger points to the work of the Poverty Action Lab at MIT. The Lab has been promoting rigorous, randomized, experiments to see what types of development assistance relieve poverty, and what types don't, or don't very well. From the New York Times: "World Bank Challenged: Are the Poor Really Helped?"
It is the same approach that has helped drug companies figure out what medicines are effective and Americans decide how best to reform welfare. Advocates for rigorous evaluations hope to make aid more effective, not by directing money to particular countries, but by spending it on programs proven to work.
The Poverty Action Lab scholars have made startling discoveries in their own randomized evaluations...
A series of education experiments in Kenya found that providing poor students with free uniforms or a simple porridge breakfast substantially increased attendance. But giving them drugs to treat the intestinal worms that infect more than a quarter of the world's population was more cost effective, with a price tag of only $3.50 for each extra year of schooling achieved. Healthier children are more likely to go to school. "You can't answer the general question: Does aid work?'' said Esther Duflo, an economist and co-founder of the Poverty Action Lab."You have to go project by project and accumulate the evidence.''
The World Bank, a lumbering giant that employs more than 1,200 Ph.D.'s, is beginning to listen to critics like her..."
What happened at the WTO on Tuesday?
Tuesday, July 27, was the first day of the WTO's General Council negotiations on the Doha trade liberalization agenda or framework (all this, Cancun and Geneva, and many negotiations between...just to flesh out the groundwork for the detailed negotiations to come). Elizabeth Becker of the New York Times reports: "Farm Subsidies Again Take Front Seat at the W.T.O.".
But neither the haves nor the have-nots were acting as single blocs, with members of both factions seeking out splinter groups focused on particular issues. At the headquarters of the World Trade Organization, the countries gathered in a general session and later broke into discrete special-interest groups that tried to devise strategies that offer enough concessions to reach a compromise, while also appeasing groups at home..."
Mr. Nshuti [Rwanda's Commerce Minister - Ben] said failure of the talks was not an option. "For Africa, we are losers already,'' he said. "If there is a failure here, it is a failure for the whole world, not just Africa.''
Analysts said that some of the tough new demands from many countries were predictable devices to win greater concessions..."
Yesterday [This is dated the 28th, so yesterday is Tuesday - Ben] both the Cattle Council of Australia and the NFF confirmed what had been unthinkable only a few months ago – that the removal of subsidies in the US and Europe was a genuine possibility.
"What they are looking at is the possible abolition of all subsidies for agriculture," Cattle Council president Keith Adams said.
"It's really been the last 24 hours that have seen the ground shift."
Here is Peter Gallagher's latest report.
Paul Blustein at the Washington Post weighs in here with a general overview of the background to, and purpose of, the Geneva meetings: "Failure in Cancun Haunts WTO". Blustein surveys some of the outstanding issues. What's at stake:
That, in turn, could adversely affect the WTO's "crown jewel" -- its system for arbitrating trade disputes among nations, according to Peter D. Sutherland, a former director-general of the organization. In a Financial Times column this month, Sutherland asked whether the global trade system can continue to function well "if the institution within which it is embedded -- and on whose rules its judgments are based -- ceases to command the respect of governments and businesses."
Revised 8:45 PM Alaska local time, 7-27-04.
Political platforms and stock prices
Brian Knight asks, "Are Policy Platforms Capitalized into Equity Prices?..." in a National Bureau of Economic Analysis (NBER) working paper summarized here: "Are Political Platforms Capitalized into Equity Prices?". From the summary (written by Les Picker):
For this sample of 70 politically sensitive firms in the United States, Knight confirms that favorable policies play a key role in determining a firm's total value. During periods in 2000 when the prospects of a Bush victory were increasing, Bush-favored firms outperformed Gore-favored firms. Likewise, during periods in which prospects of a Gore victory were increasing, Gore-favored firms outperformed Bush-favored firms..."
WTO General Council meetings open today
The General Council of the WTO should have begun this week's formal meetings at 10 AM today. The Economist reports on the start of the meetings with a short article on the prospects for the negotiations, here: "From Cancun to Geneva"
The article makes these points:
Revised, including title change, 7-27-04
How to talk about outsourcing without getting in trouble
This past February, the Chair of the Council of Economic Advisors, Greg Mankiw, created a controversy with remarks about service imports that weren't politically astute - although they made good sense about what would be best for the country. This CBS News analysis by Douglas Kiker tells what happened: "Bush Econ Advisor: Outsourcing OK".
A recent Fred Barnes article in International Economy contrasts Mankiw's comments with an alternative, politically sensitive, and vaguer, way of talking about the issue that Barnes attributes to Treasury Secretary Snow (although he doesn't say exactly when Snow made the remarks) : "Grading Bush's Economic Team"
His answer was actually more elaborate than that. "Outsourcing is just a new way of doing inter-national trade," he said. "We're very used to goods being produced abroad and being shipped here on ships and planes. What we're not used to is services being produced abroad and being shipped here over the Internet or telephone wires. But does it matter from an economic standpoint whether values of items produced abroad come on planes and ships or over fiber optic cables? Well, no, the economics is basically the same. More things are tradable than were tradable in the past and that's a good thing."
It was left to Snow, more experienced in Washington than Mankiw, to come up with
a way to discuss outsourcing. It's a four-step approach, first empathy for those who lost jobs, then economic growth as the source of new jobs, then job training, and finally a denunciation of "economic isolation" as harmful to American producers. The word "outsourcing" is never mentioned."
The EU and the WTO negotiations
Agricultural issues will dominate the World Trade Organization (WTO) talks in Geneva this week. European Union (EU) countries differ in their dependence on agriculture, and on the ways they may be affected by the negotiations. The farm sector is relatively more important in some countries, notably France, and not so important in others. France's President Chirac has been distinctly skittish about the current draft framework for negotiations.
Today (Monday, July 26) the EU Foreign Ministers (through the EU's General Affairs and External Relations Council) met and sought to paper over their different perspectives, confirming a joint negotiating position. The text resulting from their deliberations is here.
Tobias Buck and Frances Williams Financial Times report on the meeting, here:"EU seeks united front for global trade talks". The staff of the Deutsche Welle report, here: "EU Prepares for WTO Agriculture Talks".
Added link to text 7-27-04.
West African nations compromise on cotton
The WTO's General Council meet's tomorrow to hammer out a framework to guide future negotiations. But a lot of wrestling over the draft framework has already taken place.
Last week West African cotton growing countries agreed to compromise on the treatment of cotton in future stages of the trade negotiations. They had wanted cotton treated separately from other agricultural issues. Last week they agreed to folding it in with the other agricultural issues. Here's a Channel NewsAsia report: "African countries ready to compromise on cotton at WTO talks" . The The East African Standard covers the same issue: "Africa Softens Stand On Cotton Subsidies".
Benin, Chad, Burkina Faso and Mali told a WTO meeting they were ready to see cotton included in the overall negotiations on lowering barriers to farm trade, on certain conditions..."
The West African four wanted a speedy end to these subsidies and compensation for the damage that they had caused. Though small fry compared with the overall size of farm subsidies, the cotton issue (like an earlier struggle over poor-country access to cheap drugs) came to be seen as the test of whether the Doha round was indeed focused on the poor.
But the draft text that emerged halfway through the Cancún meeting was a huge disappointment. The promises on cotton were vague, pledging a WTO review of the textiles sector, but with no mention of eliminating subsidies or of compensation. Worse, it suggested that the West African countries should be encouraged to diversify out of cotton altogether.
This hardline stance had American fingerprints all over it. Political realities in Congress (the chairman of the Senate agriculture committee is a close ally of the cotton farmers) made American negotiators fiercely defensive of their outrageous subsidies. For the Africans, the vague text was a big blow. It caused ?anger and bitterness? said one delegate. As a result, the poorest countries dug in their heels when it came to the other big controversial area: that of extending trade negotiations into the four new Singapore issues. Along with many other poor countries, the Africans had long been leery about expanding the remit of the trade talks at all."
This week's WTO negotiation schedule
From the WTO website: "Brief report on on-going work, with revised text planned by Wednesday"
Ambassador Oshima observed that some ministers will be in Geneva next week. He said that the General Council meeting remains a regular general council meeting and not a ministerial meeting although members are free to decide who their representatives will be. He said he stressed this to assure delegations that will not be represented by ministers.
Consultations will continue over the weekend. evidently this briefing was Friday or Saturday - Ben] Another informal heads of delegation meeting will be convened early in the week.
The General Council will begin on Tuesday 27 July to discuss agenda items not related to the negotiations. Then the meeting will be suspended while consultations continue, to be reconvened for the Doha work programme agenda item when the informal meetings and consultations are completed, Amb.Oshima announced."
This weekend the Delsea Drive-in in Vineland, N.J., is opening for the first time since July 18, 1987. The feature film in '87 was La Bamba; the feature film this weekend is "The Bourne Identity." Friday's New York Times carried a story on the reopening by Robert Strauss: "The Drive-In Theater Tries a Comeback"
According to Jennifer Sherer, who keeps tabs on the industry through her Web site, drive-ins.com, there are now but 417 drive-ins in the United States, down from 423 in 2003. The Delsea is the only one to open this year.
"In the past few years, though, we are seeing some growth in the Midwest and the Carolinas into the South," Ms. Sherer said.
In some cases, Ms. Sherer said, drive-ins are being paired with other entertainment venues. The owners of Wall Speedway in Wall Township, Monmouth County, for instance, are hoping they can overcome neighborhood opposition to put one up in the motor-sports track parking lot by next summer."
The stats page is here. Most of the increase in the number of open drive-ins took place in the 12 years from 1946 to 1958. The number of open drive-ins declined in the early 1960s, then leveled out for a while. It plummeted between 1973 and 1987, declining more slowly since then.
How are the WTO trade talks going?
How are the WTO trade liberalization talks going? This is widely believed to be a "make or break" week of negotiations for the Doha round of trade talks. I posted on the negotiations a few days ago: "Do or Die for Doha?"
WTO members are trying to produce a general framework to provide structure and guidance for ongoing negotiations. A draft framework plan was put in circulation on July 16 and has been the subject of negotiations since. My understanding is that those negotiations may produce a revised draft after this weekend. The WTO's General Council will try to hammer out a final version this week.
Elizabeth Becker has a relatively optimistic report in the New York Times "Trade Talks in Geneva Offer More Hope This Time" This is a useful background piece, but doesn't have very much recent detail. Richard Waddington also provides useful background, in a Reuters story carried in the Canadian paper, The Globe and Mail : "WTO states make final push to revive stalled free-trade talks.
Peter Gallagher is more current, and points to two positive developments over the weekend in "Experts gloomy on WTO agriculture framework ". However, his "experts gloomy" title refers to a distinctly less optimistic poll of negotiation insiders conducted by the Institute for International Business, Economics and Law of the University of Adelaide.
Phasing out the textiles agreement
Textile quotas authorized under the World Trade Organization (WTO) Agreement on Textiles and Clothing (ATC) are scheduled to end in January 2005. The WTO web site has background here:
The quotas were the most visible feature. They conflicted with GATT’s general preference for customs tariffs instead of measures that restrict quantities. They were also exceptions to the GATT principle of treating all trading partners equally because they specified how much the importing country was going to accept from individual exporting countries.
Since 1995, the WTO’s Agreement on Textiles and Clothing (ATC) has taken over from the Mulltifibre Arrangement. By 1 January 2005, the sector is to be fully integrated into normal GATT rules. In particular, the quotas will come to an end, and importing countries will no longer be able to discriminate between exporters. The Agreement on Textiles and Clothing will itself no longer exist: it’s the only WTO agreement that has self-destruction built in..."
The end of the quotas creates opportunities for some developing countries, and threatens others. Some developing countries are given special access to developed markets as a form of foreign aid or as the by-product of a bilateral agreement. These countries will lose this advantage as barriers are reduced for everyone else. Mauritius, for one, is concerned, as this article from the weekly trade newsletter Bridges indicates: "Mauritius Calls For WTO Meeting on Textile Quota Phase-out"
"Mauritius Requests WTO Meeting To Discuss Textile Quota Elimination," WTO REPORTER, 21 July 2004."
The war on terror
Terror is a tactic, you can't wage war on it. We're at war with Al Qaeda and its allies. Terror will be with us after Al Qaeda is beaten.
Terror will be with us from now on because terror works extremely effectively for entities that are weak in traditional power. A large part of its effectiveness comes from surprise. It is hard to defend against surprise attack by enemy you may not know exists and an enemy who has the initiative.
Defense against people using terror as a weapon will depend on intelligence and force, but these aren't always going to be successful. We also need to change the way we live in order to create a society that can absorb an attack and minimize its results so far as possible. There is work here for city planners, architects, economists, political scientists, and many other disciplines.
This rant was prompted by a short article in the July Wired by Noah Shachtman: "Protected Air Space in the Workplace". Shachtman reports on efforts by DARPA (the Pentagon's Defense Advanced Research Projects Agency) to develop buildings that can sense things that shouldn't be there (anthrax) and can be begin to defend themselves (using "ultraviolet light to kill bacteria, and venting the dangerous stuff away from occupied areas").
I had a post on a similar topic last summer: "What to do about electricity shortages"
Britain's road-pricing proposal
The Economist reports that the British government has released its new transportation policy report: "Stop-Go"
That scheme, requiring a meter in every vehicle, would cost an annual £3 billion to run, but would bring in revenues of up to £9 billion. The surplus could go to public transport, or be used to cut motoring taxes.
Either way, the scheme's welcome, if a long way off: rationing road-space by congestion is inefficient, dirty and expensive. In the nearer term, local authorities will be encouraged to adopt their own congestion charges, as pioneered successfully by Ken Livingstone, the mayor of London..."
Protecting you from foreign socks and bras
Alex Tabarrok at Marginal Revolution has the story:"Socking it to us".
Credit and debit cards
Jathon Sapsford writes about credit and debit card use, in today's Wall Street Journal.
Card industry executives envision consumers being identified at cash registers with devices such as fingerprint readers or eye scanners, which would replace the signature or PIN number that consumers currently use to verify identity.
Online shoppers might identify themselves by pressing fingers to a silicon wafer embedded in the keyboard, which would read the fingerprint, match it online with a copy held by bank or merchant, then authorize the sale...."
Update on WTO Doha negotiations
Peter Gallagher brings us up to date on the "Manoeuvring on the Framework text"
“This proposal is profoundly unbalanced to the detriment of the interests of the European Union,” Chirac said.(UPI)
But his Trade Minister, François Loos, translated this into a negotiable objection
“We are asking for full parallelism to be restored,” wrote French Trade Minister Francois Loos in the newspaper Le Figaro Thursday. “If the Americans agree to get rid of their credits it would be a promising start.”... (UPI)"
Harry Potter and bureaucracy
Mahalanobis describes the portrayal of bureaucracy in the Harry Potter books: "Harry Potter, Market Wiz".
Do or Die for Doha?
In the next ten days we may find out whether or not the Doha negotiations will lead anywhere.
These are the world trade liberalization negotiations that fell apart in Cancun last September. (This article from The Economist has background on the Doha negotiations and the meeting of trade ministers at Cancun: "The WTO under fire". )
On July 16 a new draft of a potential framework for negotiations was floated by the World Trade Organization (WTO) Director-General Supachai Panitchpakdi and General Council Chair Shotaro Oshima. This week's negotiations are aimed at laying groundwork for a meeting of the WTO's General Council next week, and potential adoption of a negotiating framework by the Council.
The end-July deadline represents the WTO's attempt to put the Doha negotiations back on track following the collapse of talks at last September's Ministerial Conference. Members are working towards the deadline in order to keep the momentum up in the Doha round of trade negotiations. Should they fail to agree on the outline for negotiations by the end of the month, trade talks are likely to stall for months, if not for years, with US elections and leadership changes in the European Commission coming up towards the end of the year. The draft Framework Text covers all areas currently under negotiation, including agriculture, industrial market access, development issues, services and trade facilitation (one of the controversial Singapore issues, which also include investment, competition and transparency in government procurement)...
...In order to reach agreement on a July Framework, Members will continue to work in various formats to find an acceptable compromise. A HODs meeting will be called on Friday, 23 July, and a revised draft will likely be released following the weekend. The final meeting of the General Council is scheduled for 27-29 July, although Chair Oshima indicated that 30 July was the "drop-dead" deadline. A number of trade ministers -- including those from major Members such as the EC, US and Japan -- are tentatively planning to attend the General Council meeting"
There are various descriptions of the draft and explanations of its significance. Peter Gallagher provides a very helpful analysis of the agricultural section of the proposal: "A guide to the Annex on Agriculture". Bridges also provides a review of the agricultural text, here: "Agriculture: Developing Countries Criticise Groser Draft for Developed-Country Bias".
Oxfam thinks the draft disproportionately reflects developed country interests, and doesn't provide as much for developing countries as it should: "Rich country self-interest threatens to stall world trade talks" Key areas where change might help:
• Export dumping: While clearer language on the elimination of export subsidies is welcome, there is still no indication of the time frame, and the problem of how to deal with US export credits has not been adequately addressed. Worse, the United States is insisting on relaxing disciplines on subsidies that facilitate dumping (i.e. proposed broadening of the blue box).
• Market access: improved market access for developing countries was one of the promises made at Doha. The current framework is unlikely to deliver this as it does not address the issues of tariff peaks and escalation, nor does it propose a formula for tariff reductions.
• Special and Differential Treatment: in stark contrast with the specific attention given to sensitive products of the EU and other rich countries, the current text does not assert the right of developing countries to protect vulnerable sectors in order to assure rural livelihoods and food security"
Sunken U-boat Found
Janet Kornblum reports in today's USA Today about the discovery of a sunken u-boat on Georges Bank, off of New England: "'Sea Hunters' find deadly U-215 ".
The havoc in the Atlantic sea lanes was caused by a relatively small number of the u-boats commissioned, and the u-boat losses were enormous:
Fixing the ETI
George Mundstock on the genesis and evolution of the new Corporate Tax Bill: "No Corporation Left Behind" (this is the one that does so well by GE).
Mundstock also begins a series on corporate taxation of multinational enterprise, here: "US Taxation of Multinational Enterprise: Part I".
Mundstock is guest blogging at Michael Froomkin's Discourse.net.
I learned about this from Brad DeLong.
How to pay a restaurant bill
Michael Stastny marshals the theoretical models and experimental evidence: "The Unscrupulous Diner's Dilemma". It's a public goods problem.
There are a lot of web sites dealing with Tom ("I'd like to take you now, on wings of song as it were, and try and help you forget for a while your drab, wretched lives.") Lehrer- a political humorist, satirist, song writer and performer from the 1950s and 1960s.
For anyone interested - there are biographies here and here.
There are interviews here, here, and here.
A list of songs, with lyrics, here. A lot of work has gone into this site. References that were current at the time, but might not be familiar to younger people, are carefully explained. I was glad to finally see a photo of Alma Mahler Gropius Werfel.
A list of audio CDs available from Amazon is here.
We've come a long way since the mid-sixties. The second world war was only 20 years past; the Cold War was at its worst. A song like the "MLF lullaby" was funny then in a way it isn't now, because it tapped into anxieties we've forgotten:
Sleep, baby, sleep, in peace may you slumber,
No danger lurks, your sleep to encumber.
We've got the missiles, peace to determine,
And one of the fingers on the button will be German.
Why shouldn't they have nuclear warheads?
England says no, but they all are soreheads.
I say a bygone should be a bygone,
Let's make peace the way we did in Stanleyville and Saigon.
Once all the Germans were warlike and mean,
But that couldn't happen again.
We taught them a lesson in 1918
And they've hardly bothered us since then.
So, sleep well, my darling, the sandman can linger.
We know our buddies won't give us the finger.
Heil - hail - the Wehrmacht, I mean the Bundeswehr,
Hail to our loyal ally!
M L F
Will scare Brezhnev.
I hope he is half as scared as I!"
First we got the bomb and that was good,
'Cause we love peace and motherhood.
Then Russia got the bomb, but that's O.K.,
'Cause the balance of power's maintained that way!
France got the bomb, but don't you grieve,
'Cause they're on our side (I believe).
China got the bomb, but have no fears;
They can't wipe us out for at least five years!*
Then Indonesia claimed that they
Were gonna get one any day.
South Africa wants two, that's right:
One for the black and one for the white!
Egypt's gonna get one, too,
Just to use on you know who.
So Israel's getting tense,
Wants one in self defense.
"The Lord's our shepherd," says the psalm,
But just in case, we better get a bomb!
Luxembourg is next to go
And, who knows, maybe Monaco.
We'll try to stay serene and calm
When Alabama gets the bomb!
Who's next, who's next, who's next?
GE sees and seizes an opportunity
General Electric (GE) is on the verge of winning enormous tax advantages in upcoming corporate tax legislation. Jeffrey Birnbaum and Jonathan Weisman reported on GE's lobbying efforts a week ago in the Washington Post: "GE Lobbyists Mold Tax Bill"
In 2002 the U.S. lost a case before the World Trade Organization (WTO), which ruled that elements of U.S. international tax laws violated international trading rules to which the U.S. had agreed. Foreign countries were authorized to begin imposing punitive tariffs on U.S. products. Congress undertook to rewrite the corporate tax laws to deal with the problem, and things spun out of control. Birnbaum and Weisman note that
Patrolling the Malacca Straits
The Straits Times reports that Singapore, Indonesia, and Malaysia have begun a joint 17 naval vessel patrol of the pirate-ridden Malacca Straits. "50,000 ships ply the Straits of Malacca each year, carrying oil from the Middle East, and goods bound for Europe through the narrow passage between peninsular Malaysia and Singapore on one side and the Indonesian island of Sumatra on the other.": "3 countries start joint patrol of Malacca Straits"
The plan was rejected by both Muslim-majority Indonesia and Malaysia, although Singapore embraced the proposal.
Kuala Lumpur and Jakarta insisted foreign troops were not needed to help safeguard the waterway, and that any active US deployment would infringe on their sovereignty. However, the three countries then agreed to start their own coordinated patrols."
Productivity comes unexpectedly
Alex Tabarrok, at Marginal Revolution, describes how new communications tools are changing service procedures at some McDonalds restaurants. The economic meaning of space, and the need to co-locate economic activities in space, is changing radically: "Who would have guessed?"
The economist Ronald Coase argued that business firms evolve because it's often cheaper to coordinate the work effort of different people administratively, rather than through markets and prices. Once it was less expensive for drive-thru order takers in fast food restaurants to yell the orders to the cooks; now it's apparently sometimes cheaper to transmit the orders hundreds of miles to a call-in center which then sends the orders to the cooks. The order takers and cooks don't even have to work for the same firm.
No road to Juneau - yet
You can't drive to or from Juneau - we're cut off from the rest of the world by rivers, arms of the sea, mountains, ice fields and glaciers. You have to fly in or come by boat.
A road from Juneau north to Skagway, where it would connect with the rest of the North American road net, is under consideration, but very controversial. Sarah Kershaw laid out the issues in Thursday's (July 15) New York Times : "Alaska's Capital Weighs Loss of a Glorious Isolation"
I learned about this from Ben Muse of Cape Cod, Massachusetts.
Talleyrand drops in the Hamiltons
In 1794, the cynical and unprincipled French diplomat Talleyrand was on the lam from revolutionary France. He fled to England and then the United States...where he met U.S. Treasury Secretary Alexander Hamilton. Ron Chernow tells the story of the resulting friendship in his new biography of Hamilton:
During his two-year sojourn in America, Talleyrand cherished his time with Hamilton and left some remarkable tributes for posterity: "I consider Napoleon, Fox, and Hamilton the three greatest men of our epoch and, if I were forced to decide between the three, I would give without hesitation the first place to Hamilton. He divined Europe." Of Hamilton he told one American travel writer that "he had known nearly all the marked men of his time, but that he had never known one on the whole equal to him." Hamilton savored the roguish diplomat's company and gave him, as a token of esteem, an oval miniature portrait of himself.
Hamilton and Talleyrand were both hardheaded men, disgusted with the utopian dreams of their more fanciful, radical compatriots. As one Talleyrand biographer put it, "They were both passionately interested in politics and both of them looked at politics from a realistic standpoint and despised sentimental twaddle whether it poured from the lips of a Robspierre or of a Jefferson." Both men wanted to create strong nation-states, led by powerful executive branches, and both wanted to counter an aversion to central banks and stock markets. Oddly, Talleyrand agreed with Hamilton that Britain, not France, could best supply America with the long-term credit and industrial products it needed. Talleyrand recalled vividly how Hamilton asserted a passionate faith in America's economic destiny. In their talks, Hamilton said that he foresaw, "the day when - and it is perhaps not very remote - great markets, such as formerly existed in the old world, will be established in America." Talleyrand confessed to only one complaint abut Hamilton: that he was overly enamored of the grand personages of the day and took too little notice of Eliza's beauty..."
Ron Chernow. Alexander Hamilton Penguin Press. New York. 2004
Kerry campaign issues staff: legal issues
Jonathan Groner reports on Kerrry campaign issues staff legal advisors: "The Lawyers in John Kerry's Corner"
That group, headed by Nicholas Gess, of counsel at the D.C. office of Bingham McCutchen, is one of several clusters of well-connected lawyers and policy experts, many of them Clinton administration veterans, relied on by Kerry to brainstorm key issues.
Other groups, larded with lawyers from the D.C. offices of such firms as Arnold & Porter; Latham & Watkins; Mintz, Levin, Cohn, Ferris, Glovsky and Popeo; and Skadden, Arps, Slate, Meagher & Flom, focus on issues like economics or foreign policy. All of them report to Sarah Bianchi, the campaign's policy director and a former domestic policy adviser to former Vice President Al Gore..."
Angry Bear passes on conservative columnist Bruce Bartlett's thoughts on likely Kerry picks for economic positions: Kerry's Cabinet .
Recently the Washington Post and Slate have carried stories or columns on the same topic.
Which countries are economically freest?
The U.S. is third freest out of 123 ranked countries, according to a new CATO study. The Straits Times reports: "Singapore 2nd in economic freedom". Hong Kong comes in first. The judgment is based on an evaluation of:
Nations in the top fifth of economic freedom have an average per capita income of $26,100 compared to $2,800 for nations in the bottom fifth. Economic freedom benefits the lives of all people including the poor. In nations in the top fifth of economic freedom, the average income of the poorest 10 percent of the population was $6,877 compared to just $823 in the least free nations."
House approves FTA with Australia
The Straits Times reports that the U.S. House of Representatives approved the Free Trade Agreement (FTA) with Australia today - 314-109. The Senate takes it up tomorrow: "US House approves FTA with Australia"
But lawmakers also objected to language reconfirming US law under which patent holders keep control over sale of imports of their products in the United States, saying that could prevent drug importation.
"It's an attempt once again to thwart those in this country who want to find a way to put downward pressure on prescription drug prices," said Senator Byron Dorgan, a Democrat.
But the USTR emphasised the agreement creates no new rights for US patent holders, that Australia bans exports of its subsidised pharmaceuticals, and that the pact does not alter Congress' authority to change US law on importation."
Who should lead a Kerry administration economic team?
Yesterday I linked to a Jonathan Weisman story in the Washington Post on the Kerry campaign issues staff, paying particular attention to the economics staff: "Kerry Economic Team"
Today's Daniel Gross Slate column asks who should lead the team: (I assume he's asking who would be the best Treasury Secretary): The Men Who Would Be Bob - Can Kerry find his own Robert Rubin?. Gross reviews the pros and cons for seven candidates.
Did it jump, or was it pushed?
Did General Motors kill off urban mass transit in the 1920s "by employing a host of anti-competitive devices which, like National City Lines, debased rail transit and promoted auto sales." Or not?
Craig Newmark posts links to a selection of essays making and debunking the case: "Follow-up" Also see Newmark's post: "Revisiting two previous topics". Newmark's conclusion, after reviewing the discussion - it jumped.
Is the U.S. the top exporter to Cuba?
The Progressive Policy Institute "Trade Fact of the Week" reports on U.S.-Cuba trade:"Top Exporter to Cuba, 2004: The United States?"
If these trends hold up for the rest of 2004, total exports to Cuba will top $600 million... Perhaps more interesting, such a figure could make the United States the world's largest exporter to Cuba. The island's total imports in recent years, according to IMF data, have been around $3 billion. Spain is usually the biggest exporter at around $500 million a year. Venezuela is close behind, and sometimes above, depending on the price of oil. Other contenders include Mexico at $150 million a year and Brazil at about $75 million..."
Eleanor Herman's new book, Sex With Kings. 500 Years of Adultery, Power, Rivalry, and Revenge, a history of European mistresses, isn't devoid of information about the public finance. Jonathan Yardley reviewed it in the July 1 Washington Post: "In His Majesty's, Ahem, Service"
Kerry economic team
Tomorrow's Washington Post has a story by Jonathan Weisman on the Kerry campaign's issues organization: "Kerry's Inner Circle Expands"
Now, things are more complicated. Three more economists -- London Business School Dean Laura D'Andrea Tyson, Princeton University's Alan S. Blinder and the Brookings Institution's Peter R. Orszag -- are consulted on virtually every policy decision. Former Treasury secretary Robert E. Rubin also weighs in on major policy pronouncements.
Another circle, including Akerlof [George Akerlof, Nobel prize winning Berkely economist - Ben], University of California at Berkeley economist Alan J. Auerbach, Princeton's Cecilia E. Rouse, and Harvard University labor economist Lawrence F. Katz, advises on specific issues.
A separate "New York group" -- including investment bankers Eric Mindich, Blair Effron and Steven Rattner -- tutors Kerry on matters of domestic and international finance, while helping to raise money and woo business support...
The Carlos Boozer Affair
Michael McCann (on Sports Law Blog) posts on the ethical issues raised by Carlos Boozer's move from the Cleveland Cavaliers to the Utah Jazz:
"Oral Promises & Professional Sports: The Carlos Boozer Saga"
Boozer played high school basketball here in Juneau.
The Guardian reports on an upcoming, government funded, report in the U.K. that will recommend a new system to price road access. It sounds like cars would be required to carry a combination GPS/radio unit capable of transmitting the cars' locations to satellites. The system could track road usage and bill drivers appropriately. The report is due out later this month. The goal is to address road congestion problems. Here's the story: "Crisis plan for tolls on all roads ".
It sounds like, with this technology, it would be relatively easy to adjust charges to reflect varying levels of congestion in time and space (downtown at 3:30 PM on Sunday morning may be relatively uncongested and the charge per mile could be low; the inbound expressway at 7 AM on Monday morning may be relatively congested and the charge per mile could be high).
The technology sounds like that used to monitor vessel location and movement in the waters off Alaska. Certain classes of vessels are required to carry Global positioning system (GPS)/radio units so that their movements can be monitored. This system was introduced to monitor vessel activity with respect to areas closed to protect the endangered Stellers sea lion.
I learned about the Guardian article from Skip Sauer's Sports Economist blog: "Toll Roads"
The allocation of scarce club tables among competing celebrities
Coco Henson Scales describes her life on the service staff of a hot New York night spot in today's New York Times: "The Hostess Diary: My Year at a Hot Spot". What's Naomi Campbell like? The Bush Twins? Monica Lewinsky? Star Jones (who is Star Jones)? An honest article about a lot of mildly bad behavior.
"Who are you here with?" I ask a man holding a woman's hand.
"Just us," he says. Couples are usually passive, pleading. I look them up and down. I look past them and around them, even if there is no one else there. I bite my bottom lip as if I am genuinely worried for them. "I don't know," I say pensively.
If they are meek and I am bored, I will let them in. But if they become agitated, I turn away, or even better — pick the group behind them. Either way, my ego is going to get a boost..."
I like this business of people paying for tables, and I begin to go out of my way for customers, hoping for a reward..."
Is light rail worth it?
Molly Castelazo and Thomas Garrett of the Federal Reserve Bank of St. Louis think not: "Light Rail: Boon or Boondoggle?" (Boondoggle, they say).
One justification for the subsidies paid to build and operate light-rail systems is that light rail will reduce pollution and congestion from automobile traffic. However, building light rail is only a short-run solution to the problems of traffic congestion and pollution. To permanently alleviate the problems of traffic congestion and pollution, policy-makers must address the root cause of both: the inefficient pricing of roadway usage. Traffic congestion and pollution exist because the costs of driving an automobile are artificially low..."
Given the draw backs, why do we still keep building light rail systems? Large, concentrated benefits to a few special interests, while the total costs, which may be large, fall lightly on individuals in the overall tax paying population.
I learned about this from Peter Gordon: "Airy Plans".
Douglas Kolozsvari and Donald Shoup point to the potential benefits from pricing curbside parking so as to effectively ration access. They point to reforms in the Old Pasadena neighborhood of Pasadena, California, that combined: (1) an increase in curbside parking meter charges, (2) earmarking of the meter revenues for investment in the neighborhood in which they are raised, (3) under the supervision of a neighborhood committee.
In the absence of the reform, underpriced curbside parking spaces are a common property good. Creation of a neighborhood committee of residual claimants able to influence the curbside parking price, and the use of the revenues, simulates privatization of the resource. Kolozsvari and Shoup attribute the rehabilitation of the Old Pasadena neighborhood to this approach: "Turning Small Change into Big Changes" What's the neighborhood's optimal charge for curbside parking?:
Underpricing curb parking cannot increase the number of cars parked at the curb because it cannot increase the number of spaces available. What underpricing can do, however, and what it does do, is create a parking shortage that keeps potential customers away. If it takes only five minutes to drive somewhere else, why spend fifteen cruising for parking? Short-term parkers are less sensitive to the price of parking than to the time it takes to find a vacant space. Therefore, charging enough to create a few curb vacancies can attract customers who would rather pay for parking than not be able to find it. And spending the meter revenue for public improvements can attract even more customers..."
Eugene Volokh's new writing exercise
Eugene Volokh shares a new writing exercise that he plans to use in the next edition of his text Academic legal Writing, here: "Writing exercise".
Volokh takes a paragraph written with too many abstract words ("negative consequences") and shows how to put it back together using more concrete and specific words ("social ostracism, government harassment").
Making it cheaper to import services
The Progressive Policy Institute "Trade Fact of the Week" reports that the world deployed 325,000 additional miles of fiber-optic cable between 1998 and 2002: "Miles of Submarine Fiber-Optic Cable Deployed, 1998-2002: 325,000"
The shift has cut the cost of calls and so enabled people and businesses to spend more time calling overseas. This is one reason services trade is growing so fast..."
You might enjoy A Thread Across the Ocean. The Heroic Story of the Transatlantic Cable by economic and business historian John Steel Gordon. After moving heaven and earth for years, entrepreneur Cyrus Field and his Anglo-American Telegraph Company completed the first two telegraph lines across the Atlantic in 1866. After working so hard to bring the old and new worlds into instant communication, Anglo-American took steps to limit use of their lines, and to prevent other lines from taking up the slack:
It was only when competition reared its head that prices began to fall rapidly and usage exploded. In 1869 a new company, the Societe du Cable Trans-Atlantique Francais, laid a cable from Brest, France, to the French Island of St. Pierre, south of Newfoundland, and then on to Massachusetts. The Anglo-American Telegraph Company, naturaly opposed this new enterprise, which was largely funded by British capital, but had not means to prevent it..."
French imports of African services
The Straits Times reports on African call centers selling telephone subscriptions in France: "Outsourcing goes to Africa"
Senegal exploits its advantages:
Senegal's stability, low wages and stock of young, educated employees attracted Ms Ndiaye's employer...
So did Senegal's infrastructure - a fibre-optic cable running all the way from France which gives the country telecommunications as good as any in Europe.
'Besides, here we can get the best and smoothest French accent,' said call centre deputy managing director Abdoulaye M'boup..."
Thanks to a generous loan from a West African development bank - and operating costs that are 30 per cent cheaper than in France - the call centre will be more than doubling its staff later this year, Mr M'boup said.
Eight hours a day earns a starting salary of US$200 (S$340) a week. Pay goes up to US$500, plus benefits and bonuses, for the most productive workers...
But for a country where the minimum wage is US$85 a week, it's a godsend..."
Do you use your productivity for consumption or for leisure? And why?
Kash at Angry Bear posts an OECD figure showing changes in work hours per capita for a variety of countries between 1970 and 2002: "Labor Versus Leisure in the US and Europe"
...In Europe people have preferred to take their higher productivity in the form of leisure time. In the US the preference is to enjoy higher productivity in the form of greater consumption."
Using markets to aggregate information
Skip Sauer has a useful post, crammed with links, on the creation of internal markets by business firms seeking to take advantage of information dispersed among their employees: "Markets as a management tool"
Tyler Cowen also addresses this today: "Idea futures inside the corporation".
The counterfactual "Dominion of North America"
Matthew Yglesias and Brad Delong wonder if the American Revolution was a really such a good idea: "Was the American Revolution a Good Thing?"
Welfare states and work disincentives
Tyler Cowen highlights the work of Peter Lindert: "Where are tax disincentives highest?"
What went wrong in Cancun II
On June 30 I posted on a recent speech, "Reviving the Doha Round", by Jeffrey Schott of the Institute for International Economics (IIE). My post focused on Schott's post-mortem on the Doha meetings of last September: "What Went Wrong in Cancun".
Schott argues that delays caused by internal European Union negotiations over agricultural reforms left preparations for Cancun way behind in the summer of 2003. Efforts to recover on a short time frame were frustrated by a cascade of negotiation failures, confusion, and misunderstanding, as everyone scrambled to catch up. This leaves out important elements in Schott's story - you can read the relevant extract from his speech using the link above.
Peter Gallagher thinks Schott's explanation lets the U.S. off way too easily:
I think Geoff Schott has 'bought' a post-hoc rationalization of events from his friends in USTR.
My perspective on this was that the US and EU were asked to come up with an alternative to the 'Harbinson II' paper because neither (until Montreal) had made any substantive contribution for well over a year. The EU was engaged in trying to come up with internal consensus on the "Agriculture 2000" reform package and the USA had retired 'hurt' to its own corner after taking a battering on the 2002 Farm Bill.
The chairman of the top negotiating group (Amb. Perez del Castillo of Uruguay) perhaps wrongly felt he had no option but to put forward the Zoellick/Lamy paper for the Cancun meeting. But it never had much chance.
The weakness (not to say, 'implausibility') of the explanation of the supposed US tactic given by Geoff Schott ('hope that other WTO members would push the US back towards its original proposals on agricultural reform') indicates how muddled the US position was. The world's largest trading economy can't play coy games in trade negotiations, hoping to be pulled back from the brink by smaller allies.
Zoellick had been outmaneuvered by Lamy on several key aspects of the hastily negotiated paper, apparently under pressure to find some sort of deal (he probably already knew that he was not going to pull off the AFTA deal with the Latins).
Smaller allies (including Australia) were just stunned by the lack of US consultation and/or it's lack of steadfastness, as they saw it. The already-deeply-fractured Cairns Group -- the US' strongest ally on agricultural reform -- split instantly along lines where cracks had been papered-over (market access obligations for developing countries). The leadership of the G-20 was carved out of the side of the Cairns Group (Brazil, South Africa, Argentina) and its 'fellow travellers' (Egypt).
Now we have a fully fractured negotiation with dozens of 'factions', few good ideas and hardly any leadership. No one (it seems) really knows how to get what they want except the EU. It only has to wait....
Liz Ruskin reports (in the Anchorage Daily News) that Alaska's Senator Stevens placed a provision in a military spending bill to buy 160 acres of land from powerful North Slope figures for $2.5 million.
Ruskin reports that, at $15,000/acre, the government will be paying far more than it typically does for similar properties, and apparently far more than the value generated in an appraisal done on the property. See "Stevens inserts $15,000-an-acre offer in military bill".
The $2.5 million cost comes to more than $15,000 per acre. That's a stunning amount, said Brad Meiklejohn, who has negotiated the purchase of dozens of remote parcels across the state as the Alaska representative of The Conservation Fund...
The Air Force had the land appraised to determine the fair market value. Hansen said he was not allowed to reveal the appraiser's figure but said it was far less than the $2.5 million the Adams family was asking, and the family rejected the Air Force's offer to buy at the appraised value...
Meiklejohn, of The Conservation Fund, said conservation groups and government agencies typically pay about $500 an acre for allotments of 80 to 160 acres. He has paid as much as $3,000 an acre, he said...
The executives of ASRC [Arctic Slope Regional Corporation - Ben], one of 12 regional corporations created by the Alaska Native Claims Settlement Act, have aligned themselves with the state's Republican leaders...
Stevens, as chairman of the Senate Appropriations Committee, is greatly responsible for writing all of the annual government spending bills..."
Follow up - July 11The July 11 Anchorage Daily News carries a story by Liz Ruskin with the other side of the story: "Barrow woman defends value of land".
McConnell on the economics of vampirism
Maggie McConnell links to papers on the economics of vampirism, here: "Standard in the Literature"
McConnell and Zuppman (in the post on the value of statistical lives just below) are posting to "Optimization Prime"
Cass Sunstein wonders if poor people are worth less than rich ones
Should we use a single value of statistical life ($6.5 million?) for everyone, or should we allow it to vary, depending on the value different groups place on a change in the risk of death? Cass Sunstein addresses this issue; Andy Zuppann links to the paper and provides commentary, here: "Controversial Paper Title of the Week"
T. Veblen and utility maximizing man
I've always found utility maximizing, budget constrained, man a very useful idea. But Thorstein Veblen is not sympathetic: