Compensating globalization's losers, redux

Echoing Julian Sanchez’s argument against compensating globalization’s losers, Alex Tabarrok writes:

Imagine that transportation costs fall so that Joe buys his shoes from China. Why do lower transportation costs impose an obligation on Joe to compensate Mary, a U.S. shoe maker? If transportation costs rise (say because the price of oil increases) does Mary have an obligation to compensate Joe?…

Of course, I understand that we might have to compensate the losers from globalization because without compensation they won’t allow us to trade… It might be expedient… but is this justice?

Compensating globalization's losers, redux

Echoing Julian Sanchez’s argument against compensating globalization’s losers, Alex Tabarrok writes:

Imagine that transportation costs fall so that Joe buys his shoes from China. Why do lower transportation costs impose an obligation on Joe to compensate Mary, a U.S. shoe maker? If transportation costs rise (say because the price of oil increases) does Mary have an obligation to compensate Joe?…

Of course, I understand that we might have to compensate the losers from globalization because without compensation they won’t allow us to trade… It might be expedient… but is this justice?

Compensating globalization’s losers, redux

Echoing Julian Sanchez’s argument against compensating globalization’s losers, Alex Tabarrok writes:

Imagine that transportation costs fall so that Joe buys his shoes from China. Why do lower transportation costs impose an obligation on Joe to compensate Mary, a U.S. shoe maker? If transportation costs rise (say because the price of oil increases) does Mary have an obligation to compensate Joe?…

Of course, I understand that we might have to compensate the losers from globalization because without compensation they won’t allow us to trade… It might be expedient… but is this justice?

Rato done

Unexpected: “Rodrigo Rato stunned colleagues on Thursday with the surprise announcement that he is stepping down early as managing director of the International Monetary Fund.”

Francois: Don't revive the patient

I have yet to read someone pleased with the current WTO round being saddled with the title “Doha Development Agenda.” Some, like Joe Stiglitz and Andrew Charlton, argue that the name is misleading because the rich countries are not actually focused on development-friendly liberalization. Others believe that the moniker poisoned the negotiations from the start by giving developing countries reason to believe they might enjoy a “round for free” in which they would not have to liberalize their own trade barriers. In fact, each side is unhappy with the DDA because the other side interprets the phrase differently.

Joseph Francois is a member of the latter camp, but he thinks this clash is getting old:

If you surf the WTO website, Ministerial declarations, NGO news feeds, and the pronouncements of the alphabet soup of developing country blocks – G20, G33, LDCs, SVEs – you get the distinct impression that what matters is OECD concessions. Yet this focus on the OECD is an exercise in misdirection. Preferential access is not the key to trade-based growth… [R]ecent research suggests that preferences do not work as advertised, help parties they are not meant to help, and otherwise represent a triumph of form over substance…

If the OECD would resign from its role as scapegoat (scrapping industrial protection and then walking away), the South could then move past its post-colonial obsession with OECD import protection and finally take steps to place its own collective house in order.

Francois argues that the Doha round’s focus on an intransigent issue – agriculture – is damaging, and that WTO members would be best off declaring the round complete via some watered-down compromise and moving on to address more important issues, such as multilateralizing regionalism and promoting South-South liberalization.

Francois: Don't revive the patient

I have yet to read someone pleased with the current WTO round being saddled with the title “Doha Development Agenda.” Some, like Joe Stiglitz and Andrew Charlton, argue that the name is misleading because the rich countries are not actually focused on development-friendly liberalization. Others believe that the moniker poisoned the negotiations from the start by giving developing countries reason to believe they might enjoy a “round for free” in which they would not have to liberalize their own trade barriers. In fact, each side is unhappy with the DDA because the other side interprets the phrase differently.

Joseph Francois is a member of the latter camp, but he thinks this clash is getting old:

If you surf the WTO website, Ministerial declarations, NGO news feeds, and the pronouncements of the alphabet soup of developing country blocks – G20, G33, LDCs, SVEs – you get the distinct impression that what matters is OECD concessions. Yet this focus on the OECD is an exercise in misdirection. Preferential access is not the key to trade-based growth… [R]ecent research suggests that preferences do not work as advertised, help parties they are not meant to help, and otherwise represent a triumph of form over substance…

If the OECD would resign from its role as scapegoat (scrapping industrial protection and then walking away), the South could then move past its post-colonial obsession with OECD import protection and finally take steps to place its own collective house in order.

Francois argues that the Doha round’s focus on an intransigent issue – agriculture – is damaging, and that WTO members would be best off declaring the round complete via some watered-down compromise and moving on to address more important issues, such as multilateralizing regionalism and promoting South-South liberalization.

Francois: Don’t revive the patient

I have yet to read someone pleased with the current WTO round being saddled with the title “Doha Development Agenda.” Some, like Joe Stiglitz and Andrew Charlton, argue that the name is misleading because the rich countries are not actually focused on development-friendly liberalization. Others believe that the moniker poisoned the negotiations from the start by giving developing countries reason to believe they might enjoy a “round for free” in which they would not have to liberalize their own trade barriers. In fact, each side is unhappy with the DDA because the other side interprets the phrase differently.

Joseph Francois is a member of the latter camp, but he thinks this clash is getting old:

If you surf the WTO website, Ministerial declarations, NGO news feeds, and the pronouncements of the alphabet soup of developing country blocks – G20, G33, LDCs, SVEs – you get the distinct impression that what matters is OECD concessions. Yet this focus on the OECD is an exercise in misdirection. Preferential access is not the key to trade-based growth… [R]ecent research suggests that preferences do not work as advertised, help parties they are not meant to help, and otherwise represent a triumph of form over substance…

If the OECD would resign from its role as scapegoat (scrapping industrial protection and then walking away), the South could then move past its post-colonial obsession with OECD import protection and finally take steps to place its own collective house in order.

Francois argues that the Doha round’s focus on an intransigent issue – agriculture – is damaging, and that WTO members would be best off declaring the round complete via some watered-down compromise and moving on to address more important issues, such as multilateralizing regionalism and promoting South-South liberalization.

Whom to trust?

Harold Meyerson on an increasingly important puzzle – international capital flows controlled by governments:

China just bought itself a $3 billion share in Blackstone, the U.S. private equity firm.

To be sure, the Committee on Foreign Investment in the United States has the power to nix such purchases if they compromise national security. But what is the proper response of laissez-faire advocates to this sudden wave of foreign government investment in non-security-related companies? It’s okay if the Chinese government owns a slice of our economy but not okay if our own government does? We trust every other government more than we trust our own?

I posed this question to William Niskanen, chairman of the libertarian Cato Institute and among the most principled ideologues on our political landscape. Foreign government ownership, he argued, shouldn’t pose a problem unless that government obtains a controlling interest. When I then asked whether it would be a problem for the U.S. government to buy into such a company, he answered immediately, “I don’t think I would want to be a shareholder in a company in which the U.S. government owned a good bit of the shares,” and then, pausing, continued, “I haven’t thought about this” — “this” being the distinction between U.S. ownership and, say, Chinese.

Niskanen is hardly alone. None of us have thought sufficiently about how the belief in untrammeled capitalism could lead to foreign governments, whatever their agendas, controlling more and more of the American economy.

Via Thoma.

Globalization & iPods

Hal Varian in the NYT:

Who makes the Apple iPod? Here’s a hint: It is not Apple. The company outsources the entire manufacture of the device to a number of Asian enterprises, among them Asustek, Inventec Appliances and Foxconn.

But this list of companies isn’t a satisfactory answer either: They only do final assembly. What about the 451 parts that go into the iPod? Where are they made and by whom?

Varian summarizes research (pdf) that traces the production of an iPod across the globe:

Ultimately, there is no simple answer to who makes the iPod or where it is made. The iPod, like many other products, is made in several countries by dozens of companies, with each stage of production contributing a different amount to the final value.

The researchers – Greg Linden, Kenneth L. Kraemer and Jason Dedrick – calculate value-added for each step of the production process. Read the full column.

[HT: Arnold Kling]