July 31, 2013

As a republican, Perot was a idiot about NAFTA and many other things.

Long before NAFTA manufacturing output was increasing and employment was decreasing.



http://emsnews.wordpress.com/2010/02/28/nuclear-wars-and-earthquakes-increase-economic-problems/

I don't see any change in the rate of increase in manufacturing output or decrease in manufacturing employment because of NAFTA.

Moreover, every industrialized country has had the same decline in manufacturing employment; all of whom have nothing to do with NAFTA, other than Canada.



Krugman addressed the increase in manufacturing trade. It was not due to tariffs (or lack thereof).

You see the interwar trade decline; the growth in world trade after World War II didn’t return to 1913 levels of globalization until around 1970. But since then, trade has grown incredibly. Interestingly, the big tariff cuts in GATT rounds had already happened in the early 1950's; what we’re looking at here is trade liberalization in developing countries plus containerization, and the emergence of massive vertical specialization (iWhatevers being made in many stages in different countries).

No special moral here — and no, it doesn’t actually make the world flat, because services account for most value added and are still mainly not tradable. But it’s quite a picture.

http://krugman.blogs.nytimes.com/2013/07/03/unprecedented-globalization/

July 30, 2013

"“massacres and other unlawful killings - most by pro-government forces

and some by anti-government armed groups."

That is the same conclusion that Amnesty International reached."

"Pinheiro painted a devastating picture of the war-ravaged country: people fleeing to escape bombs from their own government, a collapsing economy and a conflict spilling across borders, “igniting tensions in the whole region.”

The government is relying on its superior weaponry and control of the skies to maintain control of major cities and lines of communications while hundreds of anti-government armed groups have increased operations in the north and south, Pinheiro said.

Pinheiro demanded that the government stop using imprecise weapons such as unguided missiles, cluster munitions and “thermobaric bombs” on civilian areas."

July 29, 2013

2 articles, one left, one right, stress a populist vs establishment rather than usual left-right.

The "Unusual" Yet Ubiquitous Left-Right Alliance: Towards an Anti-Establishment Center

AP reports: "The House narrowly rejected a challenge to the National Security Agency's secret collection of hundreds of millions of Americans' phone records Wednesday night after a fierce debate ... The vote was 217-205 on an issue that created unusual political coalitions in Washington, with libertarian-leaning conservatives and liberal Democrats pressing for the change against the Obama administration [and] the Republican establishment..." The New York Times writes "disagreements over the program led to some unusual coalitions." Similarly, NBC opined the "amendment earned fierce opposition from an unusual set of allies, ranging from the Obama administration to the conservative Heritage Foundation."

Every time you have this convergence of progressives and conservatives against the establishment, it's regarded as "unusual" "odd" or "bizarre" -- even though it keeps coming up on issue after issue: war, military spending, trade, corporate power, Wall Street, fossil fuel subsidies, as well as -- in the case of the NSA spying on the citizenry -- the central issue of Constitutional rights and civil liberties.

As documented below, the meme in the media and elsewhere is a permanent note of surprise, when it should be an established aspect of U.S. politics: There are in fact two "centers" -- one that is pro-war and Wall Street (the establishment center) -- and another that is pro-peace and populist (the anti-establishment center).

The establishment keeps the left and right populist factions at bay by demonizing them to each other -- "let's you and him fight" is the mindset -- which is why MSNBC so often feeds hate of conservatives and Fox feeds hate of progressives. If they were to pay more attention to issues, they might break them down and it might become clear that there's quite a bit the principled left and right agree on. Meanwhile, establishment Democrats and Republicans collude on war, Wall Street and much else, effectively reducing principled progressives and conscientious conservatives into pawns of the Democratic and Republican party establishments.

http://truth-out.org/news/item/17830-the-unusual-yet-ubiquitous-left-right-alliance-towards-an-anti-establishment-center

Going for Bolingbroke

American politics is no longer best understood in the left-right terms that defined 20th-century debates. Rather, our landscape looks more like a much earlier phase in democracy’s development, when the division that mattered was between outsiders and insiders, the “country party” and the “court party.”

As theories go, it’s well suited to the times. The story of the last decade in American life is, indeed, a story of consolidation and self-dealing at the top. There really is a kind of “court party” in American politics, whose shared interests and assumptions — interventionist, corporatist, globalist — have stamped the last two presidencies and shaped just about every major piece of Obama-era legislation. There really is a disconnect between this elite’s priorities and those of the country as a whole. There really is a sense in which the ruling class — in Washington, especially — has grown fat at the expense of the nation it governs.

The problem for conservatives isn’t their critique of this court party and its works. Rather, it’s their failure to understand why many Americans can agree with this critique but still reject the Republican alternative.

... as much as Americans may distrust a cronyist liberalism, they prefer it to a conservatism that doesn’t seem interested in governing at all. This explains why Republicans could win the battle for public opinion on President Obama’s first-term agenda without persuading the public to actually vote him out of office. The sense that Obama was at least trying to solve problems, whereas the right offered only opposition, was powerful enough to overcome disappointment with the actual results.

http://www.nytimes.com/2013/07/28/opinion/sunday/douthat-going-for-bolingbroke.html?_r=0

Interesting that these two articles were published at the same time, both addressing populism vs the establishment, one from a left perspective and one from the right.

July 27, 2013

"...if we can't get NAFTA and GATT scrapped..." You are half-way there. GATT died in 1994.

https://en.wikipedia.org/wiki/General_Agreement_on_Tariffs_and_Trade

"...social benefits, workers' rights protections and easier access to education and healthcare in other countries were a "subsidy" to the corporations based in those countries ..."

Where did this come from? We have had 'free trade' with Canada since before NAFTA. So much of Canada's economy is devoted to trade with the US that all of its "social benefits, workers' rights protections and easier access to education and healthcare" should no longer exist, having been eliminated as subsidies to Canadian corporations. I still hear complaints that it is hard for American companies to compete with Canadian ones because of the government "subsidies" ("social benefits and easier access to education and healthcare&quot the latter receive, but which do not count as illegal subsidies under NAFTA rules.

And international trading rules specifically allow European and other countries to exclude the VAT (used to largely fund their "social benefits, workers' rights protections and easier access to education and healthcare&quot from being ruled as a subsidy to their companies. This has stirred up some anger here since those rules make it more difficult for American exports to compete with European-made goods.

"It is not a business subsidy for a people to have a more humane social regimen or for workers to have more ability to defend themselves from exploitation by corporate power."

I agree wholeheartedly.

July 15, 2013

FDR: The world will either move forward toward unity and widely shared prosperity - or it will move

apart.

http://www.brainyquote.com/quotes/quotes/f/franklind130498.html

July 14, 2013

New Pew poll on support for immigration reform shows big ideological differences.

Public support for creating a way for undocumented immigrants to gain legal status remains high. Currently, 71% say there should be a way for undocumented immigrants living in the U.S. to stay legally, if certain requirements are met. There has been no change in opinion on this question since March.


Conservative republicans are 30% less likely to support legalization than are liberal Democrats.

Support for legal status for undocumented immigrants varies widely, but majorities across nearly all groups say there should be a way for them to stay in the U.S. legally. For the most part, there has been little change in these views since May, but opposition to legal status has increased among conservative Republicans over the last month (from 34% to 44%).


And it is these most conservative teapublicans who will push the House to kill legalization and comprehensive immigration reform.

Democrats are more confident than Republicans or independents that significant new immigration legislation will pass this year: 59% of Democrats, compared with 51% of independents and 47% of Republicans say passage is at least somewhat likely this year. Hispanics (71%) and blacks (67%) are much more likely than whites (47%) to say this.


Unfortunately, I think republicans are more accurate here. The House is unlikely to pass anything.

A majority of Americans (55%) say that the number of immigrants entering the U.S. illegally is higher today than it was 10 years ago. Just 15% say the number is lower, while 27% say it is about the same. While immigration flows are difficult to measure, research from the Pew Hispanic Center has shown that the numbers of undocumented immigrants in the U.S. had declined by 2011 (the last year for which data is analyzed), from a high point in 2007; they have also shown that migration from Mexico has declined substantially in recent years.


It is unfortunate that public policy is being made in an atmosphere in which such a critical fact is under-recognized. The republican fixation with spending billions on border security would be better understood to be the insane policy that it is.

July 13, 2013

There is too much discussion of strong environmental and labor standards according to the

Heritage Foundation.

Unfortunately, TPP negotiations to date have included excessive U.S. posturing on environmental standards and labor regulations. There is a danger of further such posturing as a proposed U.S.–European Union FTA moves forward.

http://www.heritage.org/research/reports/2013/07/2013-global-agenda-for-economic-freedom

If the Heritage Foundation thinks that US negotiators are engaging in 'excessive posturing on environmental standards and labor regulations' the negotiators must be doing something right.

(One administration strategy) will be the pursuit of trade agreements that notably do not include China. The most important of these is the Trans-Pacific Partnership (TPP), a trade agreement among a growing list of nations bordering the Pacific. It is the Obama administration’s avowed aim to construct a TPP with standards so high — especially rules regarding behavior by state-owned enterprises — that China could never join without transforming its economic system.

http://www.pewglobal.org/2012/12/10/u-s-china-economic-relations-in-the-wake-of-the-u-s-election/

Obama seems to know that we cannot compete with China by lowering standards. China will always win that race. China is vulnerable to an agreement that raises standards since it cannot join unless it does the same. This is the what European countries get out of the EU. Membership brings no tariff barriers but high labor and environmental standards.

...the negotiation is subject to the U.S. domestic politics. At the very beginning of the negotiation, the United States reminded other countries that the U.S. Congress would not accept a TPP without strong labor and environmental measures. Obviously, the United States aims to lower the comparative advantages of developing countries so as to create more job opportunities for itself.

http://english.peopledaily.com.cn/90777/8113289.html

And China knows that the TPP is not a good deal for them. "Obviously, the United States aims to lower the comparative advantages of developing countries so as to create more job opportunities for itself."

July 9, 2013

TPP talks: Heritage Foundation complains about "excessive U.S. posturing on environmental standards

and labor regulations."

Of course the last thing conservatives want to see included in TPP is anything on "on environmental standards and labor standards".

If Heritage is unhappy about Obama's 'posturing' in TPP on the environment and labor rights, then I am happy

July 6, 2013

The Hidden Progressive History of Income Tax Replacing Tariffs and Excise Taxes

Tariffs and excise taxes meant that almost the entirety of federal tax revenue came from the poor while the rich paid virtually nothing. This spawned enormous outrage.

Everyday Americans hated the tax system of the Gilded Age. The federal government gathered taxes in two ways. First, it placed high tariff rates on imports. These import taxes protected American industries from competition. This allowed companies to charge high prices on products that the working class needed to survive while also protecting the monopolies that controlled their everyday lives. Second, the government had high excise taxes on tobacco and alcohol, two products used heavily by the American working class.

Today, we are supposed to hate paying taxes. They are our “tax burden.” We vote for politicians who will reduce our taxes, even if that means destroying the welfare state. Conservatives’ century-long war against taxes has paid off by convincing everyday Americans to think taxes are a horrible thing that pays for government waste.

Our ancestors knew this was not true. The income tax was the most popular economic justice movement of the late 19th and early 20th century. This truly grassroots movement forced politicians to act in order to stay in office, leading to the 16th Amendment to the Constitution in 1913. That’s right, the income tax was so popular that the nation passed a constitutional amendment so that the right-wing Supreme Court couldn’t overturn it.

The income tax became such an overwhelming political movement during the 1890s that Congress, despite so many members' close relationship with the plutocracy, passed an income tax law that would have forced the rich to begin paying income taxes for the first time since 1870. ... But the Supreme Court in 1895 declared the federal income tax unconstitutional in the case of Pollock v. Farmers’ Loan & Trust Company. This was the same set of judges who ruled segregation constitutional in the case of Plessy v. Ferguson...

http://mobile.alternet.org/alternet/#!/entry/the-hidden-progressive-history-of-income-tax,51754f28da27f5d9d0a7ea44/1

Progressives turned to the income tax to fund the government to get away from the reliance on tariffs and excise taxes (we call them sin taxes today) on alcohol and tobacco products which hurt the poor and workers rather than the rich.

Perhaps not surprisingly, 8 years after the amendment was ratified republicans came to power and promptly raised tariffs 3 times (1921, 1922 and 1930) and cut the new income taxes. The result was that the US income inequality got progressively worse until it reached historic proportions by the end of the decade.

Raising tariffs did not make the US a more equitable nation. Which is why FDR went about reducing them while he was in office and devised institutions (like GATT) that would make it difficult for future politicians to raise tariffs. FDR knew that a fair society requires progressive taxation, strong unions and effective corporate regulation - not high tariffs.

Europe still essentially follows FDR's recipe for a fair society - low tariffs, strong unions, progressive taxation and effective corporate regulation. It still works today.

July 5, 2013

Kurgan: Global manufacturing production vs. global trade in manufacturing

A couple of weeks ago I posted a chart showing the long-term trend of world trade in manufactures relative to world production. The paper I took the chart from, however, only went up to 2000. And I decided to update it for the next edition of Krugman Obstfeld Melitz. And it’s pretty striking:



You see the interwar trade decline; the growth in world trade after World War II didn’t return to 1913 levels of globalization until around 1970. But since then, trade has grown incredibly. Interestingly, the big tariff cuts in GATT rounds had already happened in the early 1950's; what we’re looking at here is trade liberalization in developing countries plus containerization, and the emergence of massive vertical specialization (iWhatevers being made in many stages in different countries).

No special moral here — and no, it doesn’t actually make the world flat, because services account for most value added and are still mainly not tradable. But it’s quite a picture.

http://krugman.blogs.nytimes.com/2013/07/03/unprecedented-globalization/
Interesting insight into the roles that the rise of Third World countries and the advent of containerization have played in the rise in the international trade in manufactured products rather than the role played by lower tariffs.