Author Archives: jdingel

Rahm Emanuel

Barack Obama’s chief of staff will be Congressman Rahm Emanuel. Emanuel’s only votes against trade agreements seem reasonable. He opposed the US-Australia deal because it was “tainted by provisions designed to protect a captive market for the prescription drug industry.” He opposed CAFTA due to its lack of labor and environmental standards. I wasn’t very excited about CAFTA either, though for different reasons.

Emanuel has said: “I am a free trader. I supported NAFTA. I supported GATT. I voted in favor of the Singapore agreement. I voted in favor of the Chile agreement. I believe in free trade.” He’s also called out the Bush administration on its silly Cuban embargo.

How much say does the chief of staff have on trade policy? I have no idea.

Should econ bloggers be more critical of research?

Felix Salmon notes that econobloggers are better publicists than reviewers:

even as papers get a lot of play in the blogosphere, economists are generally still reluctant to make substantive criticisms on public blogs rather than in private seminars. (This doesn’t apply to policy debates, of course: they’re a different kettle of fish entirely.) The result is that economic papers get much more pre-publication attention than ever before, with most of it being very uncritical. By the time the paper’s gone through peer review, public attention has moved elsewhere.

Of course, every author loves his/her publicist, while critics are rarely thanked. And unless the criticism is particularly entertaining (such as Dan Davies’ four-part Freakonomics take-down), it is unlikely to be widely read. So the incentives are clear.

Fixed export costs: Bilateral or multilateral?

Gordon H. Hanson & Chong Xiang suggest that fixed export costs are multilateral rather than bilateral, meaning that it’s costly for businesses to “go global” but not particularly costly to enter particular countries:

In this paper, we develop a simple empirical method to test two alternative versions of the Melitz (2003) model, one with global fixed export costs and one with bilateral fixed export costs. With global costs, import sales per product variety (relative to domestic sales per variety) are decreasing in variable trade barriers, as a result of adjustment occurring along the intensive margin of trade. With bilateral costs, imports per product variety are increasing in fixed trade costs, due to adjustment occurring along the extensive margin. We apply our approach to data on imports of U.S. motion pictures in 46 countries over 1995-2006. Imports per product variety are decreasing in geographic distance, linguistic distance, and other measures of trade costs, consistent with adjustment to these costs occurring along the intensive margin. There is relatively little variation in the number of U.S. movies that countries import but wide variation in the box-office revenues per movie. The data thus appear to reject the bilateral-fixed-export-cost model in favor of the global-fixed-export-cost model.

On the other hand, motion pictures are not exactly the typical manufacturing product, so I would hesitate to extrapolate from these results to other sectors.

Warsh on the timing of Krugman's Nobel

It’s obvious that Paul Krugman became a Nobel laureate for his economics, not polemics, and I was annoyed by the political, idiotic reactions to the award that obscured the value of his technical work. I don’t think there is any reason at this point to believe that the timing of the award was political, but I am obligated to note that David Warsh, an astute observer of the economics scene, disagrees:

But the fact that the Swedish prize authorities moved Krugman’s contribution to trade theory to the top of their list, ahead of several other skeins of earlier work in other fields that are awaiting recognition, coupled with their decision to give it to him alone, rather than also recognizing Helpman, of Harvard University, his co-author in two influential monographs, was a clear indication that the Swedes wanted to send a message along with the stardust: that they enjoy reading the penetrating and acerbic commentary that he writes in his second career as a twice-a-week newspaper columnist.

Though other economists have noted that awarding Krugman the prize as the Bush administration came to a close generated (unfortunate) political chatter, Warsh is the first I have seen suggest that that was intentional.

Immigration increases the poverty rate — and that’s good!

What’s the implication of this paragraph by Mortimer B. Zuckerman?

So why haven’t overall poverty rates declined further? In a word — immigration. Many of those who come to the United States are not only poor but also unskilled. Hispanics account for much of the increase in poverty — no surprise, since 25 percent of poor people are Hispanic. Since 1989, Hispanics represent nearly three quarters of all increase in overall poverty population. Immigration has also helped keep the median income for the country basically flat for five straight years, the longest stretch of income stagnation on record.

Richard Lamm thinks that it is evidence that “illegal immigration is hurting U.S. taxpayers and the poorest Americans for the benefit of a few.”

I think it’s evidence that averages don’t characterize a distribution very well, especially for a changing population. If poverty rates are only stagnant because the newest members of the population are poor, then that is good news for Americans who have been around a while – their incomes are not as stagnant as the average or median suggests. And being a new American is good news for the “impoverished” too!

Who cares about the American poverty rate when we know that we’re making strides against global poverty through immigration?

[I know others have made this point countless times before, but a brief search yielded only articles drawing the exact opposite inference – that immigration’s contribution to poverty rates means it’s bad to let in immigrants.]