I’m sure that the headline of the Washington Post‘s front page story, “Farm Program Pays $1.3 Billion to People Who Don’t Farm,” will incite rage in many readers.
However, my reaction was “well, at least it’s not market distorting.” Respect the amber box.
Don Feder spews forth ignorant bile:
The Times claims “500 economists have signed an open letter to Mr. Bush arguing that immigration is a net plus for the nation’s economy.” Doubtless, the same 500 economists believe that tax hikes are a net plus for the economy, increases in the minimum wage are a net plus for the economy and signing the Kyoto Treaty on so-called global warming would be a big boost for the nation’s economy.
Robert Rector, a Heritage Foundation analyst who – unlike the Times standard-issue 500 economists – is invariably right about the impact of legislation on the economy, tells us the following…
It was cruel of Feder to pit Mr. Rector, who holds a M.A. in political science, against five Nobel laureates and two former chairmen of the CEA, but it was outright laughable to imply that these 500 PhDs are a bunch of leftists. I’m sure Deepak Lal and Pete Boettke would be a bit surprised to be labeled as such.
[Hat tip: the letter’s author, Alex Tabarrok]
“There’s no need to pretend that this has not been a failure.” — Kamal Nath, India’s trade minister, prior to departing early and skipping an afternoon session.
Pascal Lamy’s outline of negotiations has excluded the possibility of a new peace clause that would exempt farm subsidies from legal challenge at the WTO dispute panel for a limited time. US farm lobbies have characterized such a provision as critical, and the government has sought this immunity, arguing that it is necessary to protect farmers implementing reforms. I’m glad to see it off the table.
Alberto Alesina, William Easterly, Janina Matuszeski:
Artificial states are those in which political borders do not coincide with a division of nationalities desired by the people on the ground. We propose and compute for all countries in the world two new measures how artificial states are. One is based on measuring how borders split ethnic groups into two separate adjacent countries. The other one measures how straight land borders are, under the assumption the straight land borders are more likely to be artificial. We then show that these two measures seem to be highly correlated with several measures of political and economic success.
Neat.
The International Centre for Trade and Sustainable Development quotes Pascal Lamy as describing “green room” meetings that will happen tomorrow.
I thought that such a procedure was no longer used. T.N. Srinivasan implied so:
[T]he “Green Room” process no longer exists! The last time it was used was at the Seattle Ministerial. At Doha, the chairman structured the discussion around six topics with a “friend of the chair” leading informal discussions on each, with all delegations welcome to participate. The “friend” reported regularly to the full heads of the delegation. At Cancun, the chairman appointed five “facilitators” who played the same role as the “friends” played at Doha. [PDF]
But Martin Khor worries that the green room will cause trouble in Geneva:
Questions still abound as to whether Ministers who come to Geneva can attend the “Ministerial Green Room” that will be convened by Pascal Lamy, presumably in his capacity as Chair of the Trade Negotiations Committee (TNC). Or whether, as expected, the Green Room will accommodate Ministers from only invited members.
The issues of transparency, participation and legitimacy can be expected to arise yet again, as uncertainty swirls around as to who is invited to the Green Room, on what criteria or basis, and on whose invitation. [TWN]
And the WTO itself that the green room plays a critical role in negotiations:
One term has become controversial, but more among some outside observers than among delegations. The “Green Room” is a phrase taken from the informal name of the director-general’s conference room. It is used to refer to meetings of 20-40 delegations. These meetings can be called by a committee chairperson as well as the director-general, and can take place elsewhere, such as at Ministerial Conferences. In the past delegations have sometimes felt that Green Room meetings could lead to compromises being struck behind their backs. So, extra efforts are made to ensure that the process is handled correctly, with regular reports back to the full membership. In the end, decisions have to be taken by all members and by consensus. No one has been able to find an alternative way of achieving consensus on difficult issues, because it is virtually impossible for members to change their positions voluntarily in meetings of the full membership. [WTO]
So it seems that there is still a green room, and that its merits are up for debate.
Though you surely already know it, Brad DeLong reiterates why reading about economics in papers other than WSJ and FT is so painful.
I don’t know if Greg Mankiw agrees with Ed Lazear, but this post features the latter saying something interesting about the trade deficit:
I would like to point out the historic record suggests that countries can be in a current-account deficit or a surplus situation for very long periods of time. New Zealand and Australia have had deficits for decades. Australia in particular has been running a current account deficit that has created a level of foreign indebtedness equal to about 72 percent of their GDP, whereas our foreign indebtedness was only about 21 percent of GDP in 2004 (most recent available published data). Yet, the Australian economy has been very strong and growing at robust rates over the past decades. Australia’s real GDP has grown at an average rate of 3.5 percent over the last decade.
Don’t put Lazear in the Don Boudreaux camp, however:
There is no clear correlation between a country’s surplus or deficit and economic growth. Given the lack of obvious correlation, should we still be concerned about a large current account deficit? We should still be concerned. We must constantly monitor our international situation for the reason that abrupt changes could create problems for the U.S. economy.
On the other hand…
In particular, a rapid decline in the U.S. current account deficit would correspondingly imply a rapid decline in the U.S. capital account surplus. Were this to happen, there could be significant adverse consequences to the U. S. economy and to the rest of the world. We do not anticipate abrupt changes like this occurring.
UPDATE: Brad DeLong notes the difference between the current account deficit and the trade deficit, and the implications for sustainability. Read his post. I’d feel bad for making that error, but so did Greg Mankiw.
United Nations diplomats affirm Copenhagen Consensus, ranks climate change last.
[Hat tip: PSD]
In part because people flows are smaller than trade and capital flows, the dispersion of pay for similarly skilled workers around the world exceeds the dispersion of the prices of goods and cost of capital. This suggests that policies that give workers in developing countries greater access to advanced country labor markets could raise global economic well-being considerably. The economic problem is that immigrants rather than citizens of immigrant-receiving countries benefit most from immigration. The paper considers “radically economic policies” such as auctioning immigration visas or charging sizeable fees and spending the funds on current residents to increase the economic incentive for advanced countries to accept greater immigration.
Interesting…
Trade Diversion 