Another day, another Washington Post front page story on an economic topic without a quote from an economist. Alex Tabarrok isn’t happy.
[The story is about Wal-Mart’s generic drug prices, not trade or development, but this follows on the heels of Wednesday’s story about Wal-Mart’s vicious plot to lower tariff rates, so I couldn’t let it pass.]
Cato’s Dan Ikenson celebrates the 2006 downturn in antidumping complaints and warns of a possible resurgence:
Although antidumping initiations have declined in recent years and structural changes in the world economy should curtail the conditions that traditionally have inspired antidumping cases, efforts are underway to make the law more accessible and more attractive to protection-seeking U.S. industries. If legislation like the Trade Law Reform Act of 2006 becomes law, it will change the analysis industries conduct when considering trade actions, weighing more heavily in favor of bringing more antidumping suits. And if settlements like those that prevailed in the shrimp case fly under the radar and fail to raise legal and ethical questions, antidumping will be marketable as a revenue-generating scheme and pitched with success to industries otherwise dis inclined to bring such actions.
The shelving of the Doha Round is a serious setback for antidumping reform. Without significant changes to curtail the abuse of the antidumping law, sympathetic lawmakers and petitioners’ lawyers are more likely to succeed at broadening the protectionist impact of the antidumping law.
A new NBER working paper by Richard Baldwin and Daria Taglioni looks like an important extension of the Anderson-van Wincoop approach for trade gravity model fans:
This paper provides a minimalist derivation of the gravity equation and uses it to identify three common errors in the literature, what we call the gold, silver and bronze medal errors. The paper provides estimates of the size of the biases taking the currency union trade effect as an example. We generalize Anderson-Van Wincoop’s multilateral trade resistance factor (which only works with cross section data) to allow for panel data and then show that it can be dealt with using time-varying country dummies with omitted determinants of bilateral trade being dealt with by time-invariant pair dummies.
I’ll get a chance to read the paper next week when I have NBER access, and then I’ll know if “Gravity for Dummies” incorporated the “Log of Gravity.”
Brad DeLong assailed the Washington Post twice today, yet refrained from attacking the front page investigative story centered on this premise:
Each legislative season, corporate executives and lobbyists quietly draft hundreds of bills to suspend tariffs. Over time, the changes cost taxpayers hundreds of millions of dollars in lost revenue, a Washington Post analysis of U.S. trade data found.
No economist is quoted in the story. Apparently the authors didn’t put much effort into finding someone willing to suggest that lower input prices might be good for consumers (a.k.a. taxpayers) and the economy.
Tom Palmer pointed to the story and has more.
[I have some qualms about this form of liberalization, especially its temporary nature, but I don’t buy the WaPo spin.]
I’m currently reading William Easterly’s The White Man’s Burden
Easterly opens chapter nine with a mockingly acerbic table. Selected entries:
| Intervention | Negative consequences | Silver lining for United States |
| Vietnam War, 1961-1975 | 58,000 American dead; Communists still rule Vietnam; one of poorest countries in world; millions of Vietnamese dead | Explosion of Vietnamese restaurants in United States |
| Cambodia, 1970-73; support of pro-American military ruler; American invading and bombing | Khmer Rouge genocide; Vietnamese invasion; today one of poorest, most corrupt, most tyrannized nations | Cambodian food is good, too |
| Backing Haile Selassie in Ethiopia against Soviet-backed Somlia | Military overthrows Selassie and aligns itself with Soviets; two decades of civil war; Ethiopia still one of poorest countries in world | Live Aid concert to help Ethiopia in 1985 gave valuable experience to Live 8 musicians to help Africa twenty years later |
| Switching to back Somalia against Soviet-backed Ethiopia | Devastation of Ethiopia-Somalia with war-famine; collapse of Somali state and descent into chaos; fiasco of American intervention of 1994 | Black Hawk Down was great book and movie |
| Backing Jonas Savimbi against Soviet-backed Angolan government in 195 and again in 1980s | Government wins anyway; civil war continues after Soviet and Cubans leave and American aid ends; Savimbi is power-hungry warlord; land mines outnumber people; spectacular misery today despite great mineral wealth | Can’t think of any |
Deirdre McCloskey has long emphasized the warping effects of the “statistical significance” hurdle to publication in economics. Alan Gerber and Neil Malhotra survey the top two journals in political science to produce this finding:
There are plenty of publications with findings that are barely statistically significant and a noticeable absence of papers that fall just short of the goalline. Figure 2a is more damning.
What’s the implication? Andrew Gelman thinks it shows why hypothesis testing is problematic. Kevin Drum says it demonstrates massaging of data. The authors say:
The goal of this paper is to raise awareness of publication bias in political science. We have found that many more results are published just over the p=.05 threshold than below it, implying a certain amount of bias in parameter estimates. Our results suggest that as reviewers, editors, and researchers, political scientists appear to be far too conscious of the .05 significance level, and that this might cause important distortions in how knowledge advances in political science.
Full paper here.
Thomson Scientific suggests a Nobel for international trade theory might be due, shared by Bhagwati, Dixit, and Krugman. That’s one of three possibilities listed at their online poll.
A Tullock-Krueger award for work on rent-seeking wasn’t floated as an option. I’ve seen folks like Bryan Caplan and Barkley Rosser suggest that prize combination, but I don’t know the profession well enough to say if it’s a good prediction.
[HT: Mankiw]
Today, in the third installment of “With Water in Mind,” the Star Tribune editorial page begins a five-day series on the way that farmers are polluting the Mississippi River — and the way federal farm policy rewards them for it.
The outrage is that most farmers would readily change their cultivation practices, reducing erosion and nutrient runoff, if they weren’t tied to traditional crops and production patterns by federal farm subsidies. Congress has created several important conservation programs in the last two decades, but the majority of federal farm subsidies still reward farmers for planting the wrong crops in the largest possible quantities.
Daniel Drezner trots out some content from his new CFR book in a WaPo column. The most interesting part:
Why has U.S. trade policy ground to a halt? Shifts in domestic attitudes and world politics have combined to create one of the least hospitable environments for trade liberalization in recent memory. The most dramatic shift in opinion came from Americans making more than $100,000 a year. According to the Program on International Policy Attitudes (PIPA), support in that income group for promoting trade dropped to 28 percent in 2004 from 57 percent in 1999. A September 2005 German Marshall Fund (GMFUS) survey revealed that 57 percent believe that freer trade destroys more American jobs than it creates, and 58 percent of Americans would favor raising tariffs for imported goods if it meant protecting jobs — a higher number than in Germany, France, or Great Britain. Healthy majorities believe that trade primarily benefits multinational corporations at the expense of small businesses.
While those surveyed are incorrect about the net impact on jobs, the intuition that trade benefits larger firms and drives out smaller (less productive) firms isn’t far from the logic of the latest trade models. Economists, however, think that effect is good!
[HT: Mankiw]
The worst trade policy suggestion I have heard in a very long time:
Any company that wants to import goods into the United States would have to get a government certificate, under a plan to eliminate the nation’s trade deficit proposed by two Democratic senators Thursday, The New York Times reported Friday.
“We’re choking on trade debt and it is becoming a bigger and bigger danger to our country by the day,” Senator Byron L. Dorgan of North Dakota was quoted as saying. “We need a new strategy, and that is what we are proposing today.”…
Dorgan and Senator Russell D. Feingold of Wisconsin said the bill would create a market-based system to cut the trade deficit to zero within 10 years.
Under the measure, companies that export goods from the United States would be issued a certificate to import goods. The exporter could use the certificate or sell it to another company, the senators said.
The plan would be phased in over five years, with one dollar in exports earning 1.40 dollars in import certificates the first year, 1.30 dollars the second year, 1.20 dollars the third year and so on.
Wow. Wow. That’s all I can say. I’m floored.
[Hat tip to Sallie James.]
