Author Archives: jdingel

Is the US at fault for Doha?

Bhagwati and Panagariya blame America for Doha’s failure, citing its maximalist demands and “almost pathetic” offered concessions. Read the full piece.

In the comments section at VoxEU, Peter Gallagher objects to the authors’ argument that if India is asked to lower its bound rates sufficiently so as to lower its applied rates, then the US ought to do the same. Gallagher notes that the US bound rates on agricultural tariffs are nearly the same as its applied rates, but the relevant US policy instrument is agricultural subsidization – in which case the bound rate vastly exceeds actual payments to farmers. See this short note (pdf) by Kim Elliott for the relevant numbers – at present, the US offer wouldn’t reduce the level of total trade-distorting support.

India, whisky, and barriers to trade

India has announced that it will reduce its 550% tariff on Scottish whisky. The impetus? An Indian tycoon just bought Whyte & Mackay, one of the world’s largest Scotch whisky producers.

Alex Singleton criticizes the soon-to-be-gone tariffs:

Scotch producers are delighted, believing that they could see exports to India increase by a factor of four. Needless to say, this is exactly the opposite of what development campaigners would like to see. After all, whisky is an infant industry for India, and therefore needs “targeted protection”.

Back in the real world, targeted isolationism has had a dismal record over the past fifty years. Such isolationism breeds uncompetitive companies that fail to turn into profitable industries. It is much better for industries to be created that can actually compete in the here and now: they are the ones that really will grow into global players. Whisky is likely to be one such industry for India. Perhaps I haven’t been looking but I haven’t noticed Indian whisky on the supermarket shelves yet. I’m sure we’ll be seeing a lot more of it in the future.

Not so fast. You don’t see Indian whisky in the UK, but the problem isn’t Indian:

The term “western-style spirits” refers to products made in accordance with
internationally accepted industry standards (e.g., EU, WTO etc), which specify raw materials, aging,
level of alcohol by volume (abv), etc. Much of the whisky produced in India, for example, does not
qualify as “whisky” under the EU industry standards. The EU definition specifies that whisky has to
be made from cereals, at least 40% abv and aged for three years or more, whereas Indian whisky is
derived from molasses. [International Center for Alcohol Policies pdf]

I very much doubt that protectionism has hurt the development of the Indian whisky industry, considering the massive domestic market – Indians drink 570 million litres per year, making them by far the largest consumers of whisky.

While the Indian protectionism certainly deserved criticism – poor Kunal Doshi can only afford Scotch when drinking on his parents’ tab – the more relevant question now is whether the EU’s technical barrier to trade is reasonable consumer protection or unjustified nativism.

Africa’s image

William Easterly writes in the LA Times:

Today, as I sip my Rwandan gourmet coffee and wear my Nigerian shirt here in New York, and as European men eat fresh Ghanaian pineapple for breakfast and bring Kenyan flowers home to their wives, I wonder what it will take for Western consumers to learn even more about the products of self-sufficient, hardworking, dignified Africans. Perhaps they should spend less time consuming Africa disaster stereotypes from television and Vanity Fair.

Last summer, Shreya Shah wrote:

With better media coverage, the United States and the world would realize that there is more to Africa than death, disease, disaster, and despair. The promotion and visibility of a brighter Africa within society-at-large will play a significant role in creating cultural pride, encourage good business practice and sound investment in African businesses.

Africa's image

William Easterly writes in the LA Times:

Today, as I sip my Rwandan gourmet coffee and wear my Nigerian shirt here in New York, and as European men eat fresh Ghanaian pineapple for breakfast and bring Kenyan flowers home to their wives, I wonder what it will take for Western consumers to learn even more about the products of self-sufficient, hardworking, dignified Africans. Perhaps they should spend less time consuming Africa disaster stereotypes from television and Vanity Fair.

Last summer, Shreya Shah wrote:

With better media coverage, the United States and the world would realize that there is more to Africa than death, disease, disaster, and despair. The promotion and visibility of a brighter Africa within society-at-large will play a significant role in creating cultural pride, encourage good business practice and sound investment in African businesses.

Africa's image

William Easterly writes in the LA Times:

Today, as I sip my Rwandan gourmet coffee and wear my Nigerian shirt here in New York, and as European men eat fresh Ghanaian pineapple for breakfast and bring Kenyan flowers home to their wives, I wonder what it will take for Western consumers to learn even more about the products of self-sufficient, hardworking, dignified Africans. Perhaps they should spend less time consuming Africa disaster stereotypes from television and Vanity Fair.

Last summer, Shreya Shah wrote:

With better media coverage, the United States and the world would realize that there is more to Africa than death, disease, disaster, and despair. The promotion and visibility of a brighter Africa within society-at-large will play a significant role in creating cultural pride, encourage good business practice and sound investment in African businesses.

Zimbabwe’s nightmare

Zimbabwe is a disaster:

As the police and a pro-government youth militia swept into shops and factories, threatening arrest and worse unless prices were rolled back, staple foods vanished from store shelves and some merchants reported huge losses. News reports said that some shopkeepers who had refused to lower prices had been beaten by the youth militia, known as the Green Bombers for the color of their fatigues.

In interviews, merchants said that crowds of people were following the police and militia from shop to shop to buy goods at the government-ordered prices.

I remember when Zimbabwe’s annual inflation was over 1,000 percent. It’s now in excess of 10,000.

Zimbabwe's nightmare

Zimbabwe is a disaster:

As the police and a pro-government youth militia swept into shops and factories, threatening arrest and worse unless prices were rolled back, staple foods vanished from store shelves and some merchants reported huge losses. News reports said that some shopkeepers who had refused to lower prices had been beaten by the youth militia, known as the Green Bombers for the color of their fatigues.

In interviews, merchants said that crowds of people were following the police and militia from shop to shop to buy goods at the government-ordered prices.

I remember when Zimbabwe’s annual inflation was over 1,000 percent. It’s now in excess of 10,000.

Zimbabwe's nightmare

Zimbabwe is a disaster:

As the police and a pro-government youth militia swept into shops and factories, threatening arrest and worse unless prices were rolled back, staple foods vanished from store shelves and some merchants reported huge losses. News reports said that some shopkeepers who had refused to lower prices had been beaten by the youth militia, known as the Green Bombers for the color of their fatigues.

In interviews, merchants said that crowds of people were following the police and militia from shop to shop to buy goods at the government-ordered prices.

I remember when Zimbabwe’s annual inflation was over 1,000 percent. It’s now in excess of 10,000.

Why does economics blogging matter?

Richard Baldwin on the gap between economic theory and practice:

In the 1980s, brilliant young economists like Paul Krugman, Larry Summers, Jeff Sachs and Joe Stiglitz felt obliged to write Brookings or Economic Policy articles, to sit on government panels, to write policy reports, and to send Op-Ed pieces to the Financial Times. At the time, it was part of the definition of a being a leading scholar. It helped you get tenure at Harvard. It also bridged the gap between cutting-edge research and the public debate on trade policy, exchange rates, current account dynamics, etc.

Today’s brilliant young economists are much less interested in participating in the public debate in these ways. I have no empirical evidence to back up this opinion, but I think it is shared by many economists involved in economic policy issues and I had first-hand experience of it during my five years as a Managing Editor of Economic Policy. Young people need publications in good anonymously-reviewed journals; everything else is a luxury…

In the top economic journals, “Policy Implication” sections have fallen out of favour. Including such conjectures in a manuscript is unlikely to raise the probability of publication. Given the natural conservatism of the leading economic journals, there is probably no hope that the journals themselves will encourage authors to draw out the policy implications of their work. In any case, there is a widespread perception that policy analysis is not really the business of scientists. For example, the NBER Working Papers explicitly prohibit policy recommendations. The discussion of research results that does not take place in the journals has spilled over into cyberspace…

One can spend some pleasant hours browsing the various blogs – and even learn a lot from the big blogs, like “Economist’s View”, “New Economist”, ”Marginal Revolution”, and the sites of Brad DeLong, Greg Mankiw, and Nouriel Roubini. But this is not the profession’s response to the Discussion Sections of medical journals. It is more like the collegial coffee-room discussions we used to have when there was time for such things.

Blogs may be too informal to serve as policy discussion sections, but I love hanging out in the coffee room…

Misleading metaphors

Chang:

In pushing for free-market policies that make life more difficult for poor countries, the bad samaritans frequently deploy the rhetoric of the “level playing field.” They argue that developing countries should not be allowed to use extra policy tools for protection, subsidies and regulation, as these constitute unfair competition. Who can disagree?

Well, we all should, if we want to build an international system that promotes economic development. A level playing field leads to unfair competition when the players are unequal. Most sports have strict separation by age and gender, while boxing, wrestling and weightlifting have weight classes, which are often divided very finely. How is it that we think a bout between people with more than a couple of kilos’ weight difference is unfair, and yet we accept that the US and Honduras should compete economically on equal terms?

Sports contests are zero-sum games; economic exchanges are not. I would be surprised to read a sports metaphor that provided more economic insight than confusion. Metaphors like competitiveness are dangerous. Economists like Chang shouldn’t use rhetoric that compares economies and athletes, and free-marketers should be chastised for introducing ‘level playing field’ metaphors too.