Author Archives: jdingel

Competitiveness, a continuing series

‘Competitiveness’ rears its ugly head by Samuel Brittan, FT:

“Competitiveness” originally had a clear meaning but has now been taken up by politicians and business leaders as an all-purpose slogan… Unfortunately this debatable concept is now too generally accepted in the political world for such repudiation to be feasible. Originally some economists and officials mentally substituted the word “performance”, but now themselves talk of competitiveness, presumably thinking: if you can’t beat ’em, join ’em… What is misleading is the transfer to whole economies of concepts relevant to individual businesses or regions…

Here we come to the rub of the matter. The competitiveness analysis applies where there is a single currency. If we still had the mark and the lira we could leave the foreign exchange market to sort it out. The exchange rate is a safety valve which allows a country employing it to make up its own mind on its inflation goals and level of business support without worrying about the balance of payments.

The vogue for competitiveness arose in a fixed exchange world. Then if UK products were too expensive, or in other ways unattractive, jobs would be cut and foreign exchange reserves might be lost by the British government, which would then have to embark on one of its notorious stop-go episodes. Edward Heath’s decision in 1972 to float sterling, however reluctantly he made it, should have changed all that. Yet even the British Treasury found it difficult to adapt.

Previous installments:
Competitiveness, argh!” (11 Aug 2007)
Competitiveness, again (29 May 2007)
Obsession with “competitiveness” lives on (30 Aug 2006)
Paul Krugman – Pop Internationalism (29 Aug 2006)

Fifth Avenue farms

Behold the power of Google Maps:

“The red dots indicate people who live in Manhattan (and so clearly are neither hurting for money nor tilling the soil on the family farm) but receive agricultural subsidies from the federal government. The larger red blobs mark people receiving more than a quarter of a million dollars in farm subsidies annually.” – Yuval Levin

[HT: Norberg]

High-stakes gambling

The Newsday editorial board describes what’s on the line in the Antigua gambling case:

The organization’s credibility is on the line. It can’t risk the rap that it aggressively enforces trade rules against small nations but timidly allows the world’s economic powerhouse to skate. The integrity of the United States is also at issue. This country can’t respect trade rules that benefit us and ignore those that don’t without undermining valuable free trade agreements.

Rushford: “When ‘Free Trade’ Isn’t”

Greg Rushford criticizes Japan’s pursuit of preferential trade in the WSJ:

Japan’s FTAs (like those of Americans and Europeans) talk free trade but practice protectionism. All of Tokyo’s trade bilaterals exclude Japanese rice, where tariffs remain in the stratosphere… The WTO’s Doha Round with its pressures for genuine market opening are conveniently ignored.

The FTA between Japan and Indonesia runs to 938 pages containing rules of origin, exclusions for politically sensitive products, and protectionist specifications for 40% of local content on “sensitive” — read, politically sensitive — products. There are special rules and various product exclusions for vegetables, sugar, various dairy products, fruits, tobacco and much else. Japan won’t cut tariffs for any kind of pineapples from Malaysia, Brunei or Singapore, but will gradually reduce duties for some fresh and dried pineapples from Thailand and the Philippines. But while tariffs on Thai dried pineapples are at 6% in the first year, and will be phased out entirely in six years, the Philippines’ dried pineapples will be taxed at 7.2% at first, and won’t be duty free until year 11.

This is special-interest politics, not sound economics. The Japanese boast that their FTAs give them preferential access to oil from Brunei, natural gas from Indonesia, and export platforms for Japanese manufacturers in smaller Asian economies. To readers of a certain age, this has a familiar ring.

While it’s premature to hit the panic button, it’s sure time to sound the alarms. It’s simply wrong for the world’s leading economies to act as if they want Fortresses Asia, Europe and America. It’s truly a cause for concern that while the WTO’s Doha Round gets lip service, FTAs get done.

Rushford: "When 'Free Trade' Isn't"

Greg Rushford criticizes Japan’s pursuit of preferential trade in the WSJ:

Japan’s FTAs (like those of Americans and Europeans) talk free trade but practice protectionism. All of Tokyo’s trade bilaterals exclude Japanese rice, where tariffs remain in the stratosphere… The WTO’s Doha Round with its pressures for genuine market opening are conveniently ignored.

The FTA between Japan and Indonesia runs to 938 pages containing rules of origin, exclusions for politically sensitive products, and protectionist specifications for 40% of local content on “sensitive” — read, politically sensitive — products. There are special rules and various product exclusions for vegetables, sugar, various dairy products, fruits, tobacco and much else. Japan won’t cut tariffs for any kind of pineapples from Malaysia, Brunei or Singapore, but will gradually reduce duties for some fresh and dried pineapples from Thailand and the Philippines. But while tariffs on Thai dried pineapples are at 6% in the first year, and will be phased out entirely in six years, the Philippines’ dried pineapples will be taxed at 7.2% at first, and won’t be duty free until year 11.

This is special-interest politics, not sound economics. The Japanese boast that their FTAs give them preferential access to oil from Brunei, natural gas from Indonesia, and export platforms for Japanese manufacturers in smaller Asian economies. To readers of a certain age, this has a familiar ring.

While it’s premature to hit the panic button, it’s sure time to sound the alarms. It’s simply wrong for the world’s leading economies to act as if they want Fortresses Asia, Europe and America. It’s truly a cause for concern that while the WTO’s Doha Round gets lip service, FTAs get done.

Rushford: "When 'Free Trade' Isn't"

Greg Rushford criticizes Japan’s pursuit of preferential trade in the WSJ:

Japan’s FTAs (like those of Americans and Europeans) talk free trade but practice protectionism. All of Tokyo’s trade bilaterals exclude Japanese rice, where tariffs remain in the stratosphere… The WTO’s Doha Round with its pressures for genuine market opening are conveniently ignored.

The FTA between Japan and Indonesia runs to 938 pages containing rules of origin, exclusions for politically sensitive products, and protectionist specifications for 40% of local content on “sensitive” — read, politically sensitive — products. There are special rules and various product exclusions for vegetables, sugar, various dairy products, fruits, tobacco and much else. Japan won’t cut tariffs for any kind of pineapples from Malaysia, Brunei or Singapore, but will gradually reduce duties for some fresh and dried pineapples from Thailand and the Philippines. But while tariffs on Thai dried pineapples are at 6% in the first year, and will be phased out entirely in six years, the Philippines’ dried pineapples will be taxed at 7.2% at first, and won’t be duty free until year 11.

This is special-interest politics, not sound economics. The Japanese boast that their FTAs give them preferential access to oil from Brunei, natural gas from Indonesia, and export platforms for Japanese manufacturers in smaller Asian economies. To readers of a certain age, this has a familiar ring.

While it’s premature to hit the panic button, it’s sure time to sound the alarms. It’s simply wrong for the world’s leading economies to act as if they want Fortresses Asia, Europe and America. It’s truly a cause for concern that while the WTO’s Doha Round gets lip service, FTAs get done.