China mounts cyber attacks on Indian sites Times of India
People with Mentally Demanding Jobs Reap Cognitive Benefits into Retirement PhysOrg
High Food Prices or Low Food Prices: What Do We Want? Dean Baker
Bank of America: Countrywide Deal “On Track” Housing Wire versus Acquisition of Lender Is Possibly in Jeopardy New York Times. I don’t know whether this deal will get done, but I have long been of the view that BofA should have acquired CFC only out of bankruptcy. I guess I am old fashioned, but in my day, a company with a good reputation would never buy a significant business that was ethically tainted.
Regulators Target Oil Industry Wall Street Journal. The FTC plans to stick its nose in to curb market manipulation. This could get interesting.
Economic science fiction Paul Krugman. Ah, the truth comes out: Krugman is a geek! (I happen to like geeks, but I also realize that they are an acquired taste).
Economic Internalionalism 101 (for US Presidential Candidates) Willem Buiter. This is mainly about Larry Summers’ piece on trade yesterday in the Financial Times; it’s curious Buiter didn’t say so more clearly. A long discussion of why American workers need to lower their expectations, plus some practical recommendations.
True Men Of PR Genius Bank Lawyer’s Blog. “The past week’s Stevie Wonder Award, presented to the financial institution or affiliated party that was so blind it could not see that it was stepping in a public relations cowpie of epic breadth and depth, goes to…[drum roll]…: It’s…”
I have to take issue with Mr. Buiter’s column. He falls into the same line of argument that most free traders do: assume that free trade is some natural force that can’t be changed, merely worked around.
There is no such thing as free trade. We have a series of bilateral and multilateral agreements, forged by people, with each treaty designed to advance some goal or purpose. And in the aggregate, we have the global system of trade that we have now. The fact that this system heavily biases protections for capital, property, and corporate actions over human, labor, and environmental standards (which Mr. Buiter dismisses as rubbish protectionism) is a product of the goals set by the people who designed these treaties. And to call the end-result “free trade” is merely a nice marketing maneuver.
While Mr. Buiter trashes efforts by labor to enforce universal labor rights, he doesn’t similarly trash corporations’ efforts to enforce universal patent and copyright restrictions. If the goal of free trade is to raise living standards for all, which set of rights is more closely aligned with that goal than labor and human rights? Surely not the “right” to buy copy-protected DVDs… And if forcing countries like China and India to meet first world labor standards places too much burden on them, then why allow pharmaceutical companies to place onerous patent restrictions on their lifesaving drugs as well? Surely people dying because they can’t afford patent-protected medicines is as much a tragedy as people losing jobs because of higher minimum wages. Yet one practice is labelled “free trade” and one is labelled “protectionist.”
Secondly, Mr. Buiter talks about the diffusion of engineering and management expertise as another natural flow that can’t be altered. The fact is that much of the engineering, scientific, and management expertise that was accumulated in the West was through decades of public spending in R&D, education, and the such. The public that funded such efforts has every right to expect that the fruits of those endeavors come primarily to themselves and not to others who didn’t pay for their development. The fact that the American govt. is willing to give away America’s publicly funded and developed advantages / technology in trade negotiations in exchange for a few more dollars of corporate profit is a testament to how craven our government is, not a testament to some idealized notion of free trade.
But I don’t worry too much about Mr. Buiter. He’ll soon see “free trade” in a new light. After all, there are plenty of Indians with expertise in economics who can write in perfect Queen’s English, while charging much less than Mr. Buiter’s salary. And similarly, India’s Institutes of Technologies and Institutes of Management are already considered world class, and have much lower tuition rates than Mr. Buiter’s LSE.
I suspect that when Mr. Buiter witnesses the destruction of his domestic industry and the loss of his own job due to foreign competition in journalism and education, his perspective on free trade might change a little…
Thanks for doing the heavy lifting on Buiter.
(I happen to like geeks, but I also realize that they are an acquired taste).
Unless the geek is Tanta at Calculated Risk, whose dazzling geekiness inspires lust in every heterosexual male.
Buiter claims that monopoly rents no longer accrue to the U.S. manufacturing base, which is true, but ignores the fact that such rents still accrue to U.S. and other MNCs, not to mention the shenanigans of globalized financialization schemes. But on the other hand, technological development means that mass-based manufacturing employment in developed countries is largely a thing of the past, and an revival of manufacturing in the U.S. would be in a high-tech, highly automated form, to compete peculiarly with low-wage foreign masses. Still the producer’s surpluses involved in manufacturing do allow for many decent-paying service job spin-offs associated with it, and a revival of U.S. manufacturing and development of new manufacturing sectors will be required to deal with the gargantuan U.S. trade deficit. But what I’d doubt is that market adjustments alone would suffice to bring about the required economic transformations. Public investment, regulation and redistributive policies would be required and should be mooted, which would require figuring out ways to tap into those endlessly upwardly redistributed rents.
There was a post at Mark Thoma’s site this morning, wondering why the growing wage premium to skills/education hasn’t resulted in more workers investing more in their educations. The growth in the premium was calculated at about 1% per year or 20% over 16 years. Really, sometimes economists just don’t have a clue.