Michael Pettis defends Ben Bernanke’s global savings glut explanation of current account imbalances. Even if there are not excess savings globally, there are excess savings in certain parts of the world that likely explain imbalances:

If every part of the global system were completely rigid, a rise in savings in one part would result in a global rise in savings. But if at least one part of the system has a highly open and flexible financial system, it will act as the residual whose changes force the overall system back into balance. In the aggregate total savings and consumption may seem to have changed little, but what has happened is that an imbalance in one part has forced an equivalent but opposite imbalance in the other.

Not only does this seem to me an automatic outcome of excess savings, but it also seems to describe reality quite well. The US financial system is global in scope and so astonishingly flexible that it shifts very easily to accommodate global changes. If the rest of the world must produce more than it consumes (which is to say it saves more than it invests), the balancing entity must consume more than it produces as it absorbs those excess savings.

Read the full post and comments section for much more.

This is Reason‘s Dave Weigel using data and scholarship to refute labor protectionism:

“I don’t know many people who are ardent free traders and who want a wall built,” Kolbe says. “If you’re talking about the movement of goods, how can you not talk about movement of labor? How can you not talk about the movement of people? It’s absolutely absurd.”

It’s especially absurd when you look at the actual data. According to a 2005 study by the University of Bologna’s Gianmarco Ottaviano and the University of California at Davis’ Giovanni Peri, the surge of illegal laborers between 1990 and 2000 raised native-born wages overall but lowered the wages of Americans without high school diplomas by about 1 percent. These workers account for only 8 percent of the labor market, and their numbers are shrinking. In 2006 and 2007, tighter border controls managed to drive down the number of illegal workers picking crops in the Southwest. Americans didn’t flood the fields to do those jobs; the jobs went unfilled.

And this is Weigel, in the same article, defending NAFTA:

When you consider what NAFTA actually wrought—and you don’t count Bernie Sanders’ angina—this is all a bit mysterious. Americans are wealthier than they were 14 years ago and, with unemployment under 5 percent, are more likely to have jobs. (In the decade before NAFTA, unemployment averaged more than 7 percent.) More Americans own their own homes. Fewer Americans are going to bed hungry—dramatically so, if you scan the data on obesity.

I’m not as disappointed as Emmanuel by the piece, but that’s a really bad defense of NAFTA.

Who is Barry Eichengreen refuting when he says the eurozone won’t break up?

Now at the NYT.

[HT: Thoma]

Relative rate of assistance to agriculture, excluding decoupled payments, 1956 to 2004 (percent)

“The Relative Rate of Assistance is calculated as RRA = 100[(100+NRAag)/(100+NRAnonag) – 1], where NRAagt and NRAnonagt are the average percentage Nominal Rates of Assistance for the tradable parts of the agricultural and non-agricultural sectors, respectively.”

From: Kym Anderson and Tim Josling.

Australia and New Zealand have low relative rates of agricultural to non-agricultural protection because both had protection in manufacturing exceeding that in agriculture before they “unilaterally moved to virtually free markets in farm and non-farm goods.” European, Japanese and Korean protection is heavily concentrated in the agricultural sector. And America? It appears to protect its agricultural and non-agricultural sectors evenhandedly.

The shortcoming of the graph is that it depicts only relative protection. Visualizing both absolute and relative protection in the same figure would be very informative, though a bit difficult to construct.

Alex Singleton: Peter Mandelson says EPA opponents are spreading misinformation and propaganda.

AFP: A movie (not a documentary) about the Battle in Seattle premiered in Toronto last weekend.

Iana Dreyer: The French president’s call for CAP reform is “typical Sarko style – more markets + more national preference or protection. What the final result will be is to be seen.”

Dani Rodrik: UBC’s Nathan Nunn finds that African countries that exported more slaves between 1400 and 1900 are worse off economically today. Slave procurement resulted in state collapse and ethnic fractionalization.

Alex Singleton: Peter Mandelson says EPA opponents are spreading misinformation and propaganda.

AFP: A movie (not a documentary) about the Battle in Seattle premiered in Toronto last weekend.

Iana Dreyer: The French president’s call for CAP reform is “typical Sarko style – more markets + more national preference or protection. What the final result will be is to be seen.”

Dani Rodrik: UBC’s Nathan Nunn finds that African countries that exported more slaves between 1400 and 1900 are worse off economically today. Slave procurement resulted in state collapse and ethnic fractionalization.

Alex Singleton: Peter Mandelson says EPA opponents are spreading misinformation and propaganda.

AFP: A movie (not a documentary) about the Battle in Seattle premiered in Toronto last weekend.

Iana Dreyer: The French president’s call for CAP reform is “typical Sarko style – more markets + more national preference or protection. What the final result will be is to be seen.”

Dani Rodrik: UBC’s Nathan Nunn finds that African countries that exported more slaves between 1400 and 1900 are worse off economically today. Slave procurement resulted in state collapse and ethnic fractionalization.

I prefer Richard Baldwin’s quasi-cartographic illustration, but this figure by Gary Hufbauer and Jeff Schott also usefully conveys the picture of preferential trade in Asia:

Figure 1 in Hufbauer and Schott, “Fitting Asia-Pacific Agreements into the WTO System” (pdf) from the Multilateralising Regionalism conference.

Trade policy wonks are gathering in Geneva this week. Not for WTO negotiations, but for a conference on multilateralising regionalism. It launched yesterday morning and concludes Wednesday afternoon.

Multilateralising Regionalism is a two and a half day conference dedicated to exploring these issues, and in particular, the relationship between regionalism and the multilateral trading system. The first two days of the conference will explore how regional trade agreements might be tamed through a multilaterally based approach to redefining trade cooperation. The final half day will consist of a high-level discussion by policymakers and scholars of the issues teased out in the first part of the conference.

The conference papers don’t seem to be available online (UPDATE: The WTO has now uploaded them!), but they will be published by the WTO as a monograph. Pascal Lamy’s opening remarks:

One might well ask what yet another conference on this subject can add. My answer to this is that I believe this conference is asking a number of questions that have not previously been addressed, notwithstanding the proliferation of scholarly literature.

We are not really asking here why so many regional agreements have sprung up — that question has dominated many a debate, and many interesting explanations have been offered. Rather, this conference looks forward and asks questions about how policymakers, traders and businesses think about, and react to, the explosion of regionalism…

A key idea underlying this conference is that the tangle of overlapping trade agreements will increasingly generate an interest in multilateralizing regional arrangements, in expanding them — or in other words, collapsing them into larger entities that bring us much closer to a multilateral system of trade arrangements. The question, then, is what forces and interests might push trade relations in a multilateralizing direction.

I covered Richard Baldwin’s paper on multilateralising regionalism back in July 2006.

UPDATE: The papers are available online now. That’s a lot of reading to do this weekend!