Author Archives: jdingel

AEA papers available

Many of conference papers from last week’s AEA meetings are now available. I haven’t looked at them yet, but over the coming week I’ll be checking out the sessions on The Economic Geography of Trade and Production (chaired by Stephen Redding), Firm Heterogeneity and International Trade (chaired by Kala Krishna), Reform: For Better or for Worse? (chaired by Gene Grossman), Offshoring and the Labor Market (chaired by Pol Antras), Trade and Political Economy (chaired by Giovanni Maggi), Innovation, Productivity, and Firm Behavior (chaired by Ralf Martin), and Anne Krueger’s piece on trade and development (pdf).

The roots of (some) public opinion about globalisation

What are French and German students learning about globalisation?

“Economic growth imposes a hectic form of life, producing overwork, stress, nervous depression, cardiovascular disease and, according to some, even the development of cancer,” asserts Histoire du XXe siècle, a text memorised by French high-school students as they prepare for entrance exams to prestigious universities…

In several texts, students are taught that globalisation leads to violence and armed resistance, requiring a new system of world governance. “Capitalism” is described as “brutal”, “savage” and “American”. French students do not learn economics so much as a highly biased discourse about economics…

German textbooks emphasise corporatist and collectivist traditions and the minutiae of employer-employee relations – a zero-sum world where one loses what the other gains. People who run companies are caricatured as idle, cigar-smoking plutocrats…

Describing globalisation, another text has sections headed “Revival of Manchester Capitalism”, “Brazilianisation of Europe” and “Return of the Dark Ages”. India and China are successful, the book explains, because they practise state ownership and protectionism, while the freest markets are in impoverished sub-Saharan Africa. Like many French and German books, it suggests students learn more by contacting the anti-globalisation group Attac.

It is no surprise that the continent’s schools teach through a left-of-centre lens. The surprise is the intensity of the anti-market bias. Students learn that companies destroy jobs, while government policy creates them. Globalisation is destructive, if not catastrophic. Business is a zero-sum game. If this is the belief system within which most students develop intellectually, is it any wonder French and German reformers are so easily shouted down?

That’s Stefan Theil in the Financial Times (sub. req.), but read the unabridged version at Foreign Policy.

Will NAFTA liberalize sugar in 2008?

Promising lede from Bloomberg:

Mexico and the U.S. are about to eliminate the last tariffs on goods they trade, prompting opposition by lawmakers and farmers in both countries who anticipate a flood of cheap imports.

In Mexico, farmers plan nationwide protests over what will be the final step in implementing the North American Free Trade Agreement on Jan. 1 and eliminating tariffs on American-grown beans and corn. The U.S. will drop tariffs on flip-flops, glassware and sugar, the most price-sensitive import.

“Back in 1993 when Nafta was negotiated, 15 years was a lifetime away,” said Daniel Erikson, a senior associate at the non-partisan Inter-American Dialogue in Washington. “But now this is really affecting the most sensitive products.”

Disappointing details:

Trade groups representing food makers and the Bush administration are among those who warn that unlimited sugar imports from Mexico could force the U.S. government to pay as much as $3 billion in loans over 10 years as prices fall.

Still, the imports could be checked given that Mexican prices for sugar have stayed above those in the U.S. for much of the last seven years.

“This is not just a threat to American sugar producers,” said Jack Roney, director of policy analysis with the Washington-based American Sugar Alliance. “There’s also an opportunity for us to actually export to Mexico.”

At the urging of Roney’s group, Congress adopted a measure opposed by Bush to force the U.S. to buy any surplus sugar and use it to make ethanol.

If the United States government is committed to providing expensive bailouts, then reducing tariffs and quotas isn’t much of an improvement.

Krugman on trade skepticism

Paul Krugman calls for a bit of respect:

I am arguing for an end to the finger-wagging, the accusation either of not understanding economics or of kowtowing to special interests that tends to be the editorial response to politicians who express skepticism about the benefits of free-trade agreements.

It’s often claimed that limits on trade benefit only a small number of Americans, while hurting the vast majority. That’s still true of things like the import quota on sugar. But when it comes to manufactured goods, it’s at least arguable that the reverse is true. The highly educated workers who clearly benefit from growing trade with third-world economies are a minority, greatly outnumbered by those who probably lose.

As I said, I’m not a protectionist. For the sake of the world as a whole, I hope that we respond to the trouble with trade not by shutting trade down, but by doing things like strengthening the social safety net. But those who are worried about trade have a point, and deserve some respect.

Is Democratic trade anxiety too late?

Dean Baker deviates from the Democratic base‘s obsession with halting new trade agreements:

As a practical matter, the country has already gone about as far as it can in placing its manufacturing workers in competition with low-wage workers in the developing world. The impact of any future trade deals on the US economy will be almost imperceptible.

The latter sentence may be true with regard to low-wage workers; it’s not true generally, unless Baker is implying that “any future trade deals” will be limited by political constraints. We can certainly imagine trade deals that would have noticeable impacts.

Should the World Bank name and shame its own?

Per Kurowski on the World Bank’s fight against corruption:

[P]lease search out INT on the external website of the World Bank and then click on the list of Debarred Firms and Individuals. On that list you will find, duly named and shamed, the names of many individuals that one way or another after a due process have been considered involved in corruption, but that list does not include one single name of those officers of the World Bank that presumably must also have been involved in these acts of corruption one way or another. Susanne Folsom the Director of INT, on a Q&A session on that same site mentions, “We’re often asked why we don’t publicly name Bank staff who are terminated for fraud and corruption as well. The Bank’s rules don’t allow such disclosures….” What credibility can you get naming others while not being willing to name your own?