I just watched the 30 minute spot. Very well done. In case people have been worrying that Obama’s secret socialist ‘spread the wealth’ scheme hasn’t gotten enough play, maybe because the MSM has been trying to keep it under wraps – well, Obama has gone and broken through that silence from the other side. He has gotten the socialist message out loud and clear. He is definitely in favor of raising taxes somewhat on the wealthy to offset tax cuts for the hard-hit middle class. If this be European-style socialism, if Obama wins handily on election day, then I take it conservatives will acknowledge that the American people have handed Obama a clear mandate for wholesale abandonment of American values in favor of European-style socialism. Right? (I mean: I don’t think it will be a mandate for that. I’m a sensible sort of person. But conservatives will surely see an Obama victory as a mandate for socialism. Right?) [click to continue…]
From the category archives:
World Economy
(1) When I heard the kerfuffle about Obama’s radio discussion on civil rights and the constitution, I went back and listened to it, drawing two major conclusions. First – that anyone who expects him to appoint lots and lots of radical judges, is likely to be very disappointed; he has a small c conservative understanding of what the judiciary can do. Second, I was reminded how much I missed _Odyssey_ – it was the best radio show I have ever been on, and more generally, a really first rate contribution to public discussion. A full audio archive is available here.
(2) Via Josh Cohen, Archon Fung and ABC news have put together MyFairElection, which seems a very useful exercise for those of you who are (unlike me) eligible to vote next week. It combines Google maps with data on polling stations, allowing people to report problems such as long lines etc, and (if it works according to plan), provide a ‘weather map’ of voting conditions across the country.
(3) I did a Campaign Free edition bloggingheads with Dan Drezner yesterday on changes in the global economy. The dialogue stopped early because Dan had to pick up a sick kid from school, but was pretty interesting for me, at least – in contrast to many of these conversations, which involve battles over set piece positions, I found myself actually rethinking what I understood to be going on and its implications during the process (so, a real conversation, or something like it).
When I suggested a couple of weeks ago that the intellectual hegemony of free market capitalism was under threat, Dan Drezner expressed polite skepticism.
Is this the beginning of a norm shift in the global economy? It’s tempting to say yes, but I have my doubts. The last time the United States intervened on this scale in its own financial sector was the S&L bailout — and despite that intervention, financial globalization took off. The last time we’ve seen coordinated global interventions like this was the Asian financial crisis of a decade ago — and that intervention reinforced rather than retarded the privilege of private actors in the marketplace. In other words, massive interventions can take place without undercutting the ideological consensus that private actors should control the commanding heights of the economy.
Pancho: So what does political philosophy have to say about the banking crisis?
Lefty: Excuse me?
Pancho: Well, millions ruined, pensions and savings binned, an appeal to taxpayers to save the banks? It all seems rather, um, well _distributive_… I’d have thought you could give us some policy advice?
Lefty: Well I don’t really do that kind of thing, I do ideal theory.
Pancho: What’s that when it’s at home?
Lefty: I’m mainly concerned with devising optimal principles of social regulation under conditions of strict compliance, this is far too messy for me …
Pancho: Go on, have a go!
Lefty: OK well, since you insist …. Luck egalitarianism might be a good starting point.
Tyler Cowen points to this NYT article on the international fallout from the current market crisis in the US.
Is the United States no longer the global beacon of unfettered, free-market capitalism? In extending a last-minute $85 billion lifeline to American International Group, the troubled insurer, Washington has not only turned away from decades of rhetoric about the virtues of the free market and the dangers of government intervention, but it has also probably undercut future American efforts to promote such policies abroad. [click to continue…]
This seems to me to be the most interesting analysis I’ve read so far.
A glance at the electoral map suffices to confirm what earlier opinion polls had indicated: the Irish vote divided along class lines in a stark and disturbing fashion. In the most affluent constituencies of Dublin, such as Dun Laoghaire, where even a modest home can cost upwards of €1 million (although that is changing), 60% or more voted for the treaty. In working class areas of the city, it was the no vote which scored in excess of 60%. Brouard and Tiberj (2006) show that precisely the same division between rich and poor, or the skilled and unskilled, can be discerned in the French 2005 vote. …
The argument would be that globalisation generally, and European integration more narrowly, has overwhelmingly favoured skilled workers, at least in affluent countries such as France, Ireland and the Netherlands. Unskilled workers, by contrast, feel under threat from Romanian (or Asian) competition, or immigration from Eastern Europe and further afield. And while those of us who are more fortunate might regret it, it is hardly surprising that — in accordance with Heckscher-Ohlin logic — they vote accordingly. … Unbelievably, given the importance of the vote, there were no exit polls taken which might give us an indication of why those who voted no did so. But I have to say that my bet is that the gap between middle-class and working-class voting patterns has a lot more to do with different interests, real or perceived, than with supposed differences in political sophistication. …
If this interpretation is correct, then the Irish referendum result, in one of the most pro-European members of the Union, should serve as a wake-up call to politicians that if they want to maintain the benefits of open international markets, as I do, they will simply have to take more notice of the concerns of those who are being left behind.
Update: The Eurobarometer report on a flash survey they did immediately post-referendum is available at Irishelection.com. Thanks to Simon in comments for the pointer.
Cato Unbound is currently carrying an interesting contribution from Leif Wenar on how to combat the “resource curse”. Leif proposes a two-stage strategy for attacking the problem of kleptocrats who use the state monopoly of violence to extract resource revenues whilst their population lives in poverty. The first step is to prosecute (in American, and presumably also European courts) traders in goods stolen from peoples by their rulers. The second step is to go after stolen natural resources that get incorporated into manufactured goods elsewhere (say in China) and then imported into the US. Here Wenar advocates a tariff on those goods, the proceeds of which would be paid into a fund to be held for the benefit of the people whose resources have been stolen, with the fund to be disbursed to them when their government meets minimally acceptable standards.
Surfing over to Charles Dodgson‘s site yesterday, I happened upon Elizabeth Warren’s lecture on the squeeze on the American middle class since the 1970s. Then you could bring up a family on one income; now you can’t. Then non-discretionary spending made up a smaller proportion of household spending; now, it dominates. Result: if a parent loses their job or gets sick, bankruptcy looms. I didn’t expect to sit watching a YouTube video for whole hour but I was riveted by the story Warren tells with the consumption statistics.
I was kind of reluctant to blog this too. After all, there are others at CT who do sociology or economics or family policy and I don’t do those things. And I’m not an American resident either. Still, it struck me as pretty compelling. I wonder how similar the change has been in the other OECD countries?
Over at our joint I’ve been doing a fair bit of “this day seventy-five years ago” because of the anniversary of Roosevelt’s hundred days and, well, because. This one may hold some interest for an international readership:
On this day in 1933, British Prime Minister Ramsay MacDonald delivered an address from the National Press Club in Washington, DC, discussing the common problems of the US and UK: “In America at this moment and in Great Britain there are millions of men who want work and can’t get it…. Governments cannot be indifferent to a state of things like that.”
MacDonald looked forward to “wise international government action,” to be established at the upcoming international economic conference. He hoped it would revive “a freely flowing international exchange,” i.e., trade—“Self-sufficiency in the economic field on the part of nations ultimately ends in the poverty of their own people.”
He was mindful of the apparent irony in Britain’s having taken the nationalist, defensive action of going off the gold standard: “Can you imagine that in the early days of that crisis we said gayly and light-heartedly, ‘Let it rip. Let it rip. We will go off gold. There are benefits in being off gold, and we will reap them.'” Obviously he meant the answer to be “no.”—“And so on this currency question, agreement is the only protection.”1
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note: I originally wrote this for the Dani Rodrik seminar. As it grew, though, it became apparent that it didn’t really have much to do with “One Economics, Many Recipes” and that it was thus a bit unfair to ask Dani to comment on it. On the other hand, I liked it too much to kill it altogether – dd
“One Economics, Many Recipes” makes a lot of useful and constructive suggestions about how to attack the central problems of economic development. However I don’t think it gives enough emphasis (fundamentally because I don’t think it’s possible to give enough emphasis) to international debt as a constraint on development. Nearly all of the success stories in the book relate to countries which started their periods of development without a large debt burden, and the presence or absence of large net external debt is certainly one characteristic which matches up well to the motivating stylised fact in the book – the distinction between those countries like Argentina which followed all the standard policy recommendations but didn’t develop and those like China which ignored them and did. In this essay, I’ll try and flesh out a few provocative views on the financial aspects of development policy, which in my view are just as important real-world constraints as the institutional real-economy factors that are the main subject matter of the book.
Actually, just as I don’t think it’s sensible to carry out international comparisons of crime rates without taking demographics and urbanisation into account, I don’t think that any kind of comparative analysis of developing economies can be carried out at all without conditioning on the debt burden. It’s that important. When you have a situation in which a country’s capital account is dominated by contractual flows payable in foreign exchange, that is far and away the most important fact about that country’s economy. This is because as long as the debt service constraint is binding (and I discuss what happens when it isn’t, below), then unless the country is receiving massive net transfers from abroad, the entire economic development program is going to end up being twisted toward a capital account constraint which almost certainly has nothing to do with a sensible locally-based development plan of the kind that Dani advocates.
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We’ll be doing a seminar on Dani Rodrik’s new book _One Economics, Many Recipes_ in the nearish future. Originally, the seminar was going to go upshortly after the book’s launch, but the book got out into the stores earlier than originally planned. Those who have an interest in buying the book so as better to follow the discussion can do so at Powells or Amazon.
The dollar will collapse no later than one week from today. As of noon on October 15, you will not be able to buy a loaf of bread for $100,000. That’s the optimistic scenario. The crash may come sooner than that. It might be Thursday. It sounds like Thursday will be bad.
Yeah, things are heating up again in LaRouche-land. The Youth Movement kids haven’t been out in force singing on Capitol Hill much over the past two or three months. But it’s clear that supporters are now being pushed into a frenzied state, more even than usual. At the website where ex-members get together, plans are being made to send one true believer a loaf of bread as soon as the deadline for disaster passes.
No doubt it is an utter and total coincidence that The Washington Monthly will soon publish an in-depth article on recent developments in the organization.
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Matt Yglesias agrees for once with Airmiles Friedman.
It’s really baffling that we would give someone a visa to pursue high-level education in the United States and then do anything other than automatically give them a visa to work here. If we’re going to be stingy with anything, it should be with spots at our universities (in practice, there tend not to be Americans clamoring to get graduate schooled in technical disciplines), not spots in our labor force. Unlike the immigration of unskilled workers, immigration of highly skilled people is a totally uncomplicated balance of considerations. It’s good for the immigrant, it boosts the American economy as a whole, and instead of putting mild downward pressure on the wages of the least-fortunate native born people, the costs are borne by better-off Americans. It’s a total no-brainer.
Not so. It may be a total no-brainer for US economic wellbeing. It isn’t a no-brainer for the home country of the workers in question. Cue Dani Rodrik, who thinks that a guest worker program would be ‘terrific,’ a point that he has developed at greater length in an earlier paper (PDF).
To ensure that labor mobility produces benefits for developing nations it is imperative that the regime be designed in a way that generates incentives for return to home countries.
While remittances can be an important source of income support for poor families, they are generally unable to spark and sustain long-term economic development. Designing contract labor schemes that are truly temporary is tricky, but it can be done.
This is the reason why, for example, people who come to the US to do advanced degrees with support from Fulbright scholarships (such as meself once upon a time) are obliged to return to their home countries (or, in the case of EU citizens, the EU) for a period of two years before they can apply for a proper work visa or permanent residency. Speaking from my personal experience, this can be a considerable pain in the ass, but it has an undeniable logic. The home country in question isn’t going to benefit very much from its most economically productive citizens (which category doesn’t include me; I was always likely to be a net drain on the Irish economy) going to the US to study, if they don’t ever come home. This point applies with _especial_ force to people coming over to study for advanced degrees in technical subjects. I think it’s possible to construct a slightly convoluted cosmopolitanish case against temporary worker programs (this would have to do with labour standards and the need for strong unions in the US to mitigate the global deregulatory impact of US preferences on the world economic regime; I may lay this out in a later post). But I don’t think it’s possible to construct one against the kinds of programs that Matt favors here. So if you are solely concerned with the economic benefit of the US, it’s indeed a no-brainer. If you’re worried about the rest of the world too (or instead), it’s anything but.
Brad DeLong links approvingly to Thomas Barnett’s attack on James Mann and other China ‘fearmongers.’ Insofar as I can read through Barnett’s self-created jargon of “the Gap” etc, I don’t find this critique to be insightful, compelling, or indeed particularly accurate. [click to continue…]
There’s a useful blog covering l’affaire Wolfowitz here . So far as I can see the Wall Street Journal is almost alone in spinning a pro-W line (what a surprise!).