Topic: International Economics and Development

The Upside of Nature’s Wrath

Fourteen months after Katrina devastated large swaths of the Gulf Coast, the Commerce Department has finally gotten around to promulgating new regulations that could relax antidumping and countervailing duty restrictions for a temporary period after the next national emergency.

In the weeks following Katrina, some observers (including this one) pointed to the absurdity of maintaining restrictions on foreign cement, lumber, and steel when the costs of those crucial building materials comprised a substantial chunk of the projected reconstruction bill.  Of course, trade restrictions raise the cost of production to U.S. businesses and the cost of living for U.S. citizens everyday.  But the effects of the hurricane provided an extreme example of the lunacy of trade restrictions, which is what was necessary to get the Commerce Department to acknowledge that its protectionist trade policies carry real costs.

The scope of circumstances that will trigger temporary lifting of trade remedy restraints prospectively is a bit unclear, but it requires the president to authorize Commerce “to permit the importation of supplies for use in ‘emergency relief work’ free of antidumping and countervailing duties.”  Considering that emergencies are typically met with a costly (and often mismanaged) federal response, a regulation that actually mandates loosening the federal noose is welcome news indeed.

Now, all we need is a president who will consider it “emergency relief work” to educate policymakers about the predictable impact of constrained supply on price. 

America’s National Truck?

As another election approaches, Americans have probably grown jaded toward politicians who use naked appeals to patriotism to win votes. Now patriotic appeals are being enlisted to sell pickup trucks.

Baseball fans watching the World Series game Friday night witnessed an ad by General Motors that had nothing to do with the finer qualities of its Silverado pick up truck. Set to the driving beat of a John Mellencamp song, “Our Country,” the ad flashed images designed to tug at the heart of every red-blooded American. (It certainly tugged at mine.) Here’s how a New York Times story today described the ad:

As the commercial begins, an industrial history rolls out, touching the usual icons of the Statue of Liberty, busy factory workers and Americans at their leisure. But then a more conflicted narrative emerges, quickly flashing on bus boycotts, Vietnam, Nixon resigning, Hurricane Katrina, fires, floods, then the attacks of Sept. 11, replete with firefighters.

All that’s missing is a plague of locusts, until the commercial intones ‘This is our country, this is our truck’ as a large Silverado emerges from amber waves of grain.

The not-so-subtle message is that if you are a real American, you buy a real American vehicle. Of course, this is not the first time patriotism has been exploited to sell a product, but the ad obscures an important fact about the American automobile industry: it is far more diverse today than the Big Three of Ford GM, and Chrysler.

In a Cato Free Trade Bulletin published over the summer, my colleague Dan Ikenson and I showed that, while Ford and GM in particular have struggled with declining sales and huge losses, the U.S. automobile market remains healthy. Last year, American workers produced about 12 million cars and light trucks domestically, including those made in factories owned by Honda, Toyota, Nissan, and BMW. American families can chose from a wider range of affordable, quality vehicles than perhaps ever before.

The Big Three have been losing market share, not because Americans are any less patriotic than in the past, but because Americans are increasingly exercising their freedom to decide for themselves what  is “our truck.”

Honest, Abe Wants School Vouchers

The Guardian reports today that Japanese prime minister Shinzo Abe is in favor of school vouchers – and Japan has more experience with market education than most countries, due to its multi-billion-dollar for-profit tutoring industry.

A number of Japanese scholars have observed that their nation’s success on international tests would be unthinkable if it weren’t for the huge popularity of these “juku” tutoring schools. So it begs the question: if the market has worked so well in the tutoring sector, providing education that is so much more flexible, child-centered, and effective than the monopoly school sector, why not liberalize the entire education industry by eliminating the preferential tax funding status of the government schools?

Some will argue that Japan’s private juku schools are too narrowly focused on test preparation, but this is merely a symptom of the niche that juku currently fill in the marketplace. Japan also has numerous traditional private high-schools. Get rid of the financial discrimination currently practiced in favor of government-run k-12 schools, and a wealth of new educational options would arise.

And while the Japanese already trounce much of the world in math and science with only their tutoring schools organized along free market lines, just imagine how they would do with a fully liberalized education market from kindergarten through high-school!

A Great End to the Conference on ‘Freedom, Commerce, and Peace’

I’m really happy with the conference on “Freedom, Commerce, and Peace: A Regional Agenda.” We had Georgians and Russians, Ukrainians and Belarusians, Armenians and Azeris, Iranians and Iraqis, Romanians and Moldovans, and on and on…28 nations in all.

The first discussion of the last day of the conference was of a high order, with Robert Lawson speaking on the Economic Freedom of the World Report and Cato’s new Senior Fellow Andrei Illarionov offering a high-level critique of methodology and suggestions for improvements. The discussion was very scientific and really focused attention on the issues of explaining the relationship between liberty and well being. Ricardo Martinez Rico, former Deputy Minister for the Budget of Spain, gave a fascinating and practical guide to how Spain managed to get its state budget under control, along with concrete proposals for the assembled reformers from Eurasia.

The three workshops (organizing a think-tank, involving free media in public information campaigns, and using the economic freedom of the world data to promote reform) went well, as did Johan Norberg’s presentation on the environmental case for property rights, which moved participants to avoid environmental disasters by promoting transferrable rights in fisheries, forests, and other natural resources. Some other highlights were former Croatian Justice Minister Vesna Skare-Ozbolt’s presentation on “Improving the Rule of Law” and the presentation and discussion of Warren Coats’s paper on “Creating Monetary Stability and Financial Sector Freedom.” (Ok, the others were good, too, notably the energetic presentation by my friend from Belarus, Jaroslav Romanchuk, on how to convince the public of the benefits of liberty.) 

The papers will be collected and edited over the coming months; my plan is to publish them in English and in Russian editions.

Finally, the concluding banquet address by former Estonian Prime Minister Mart Laar was outstanding — the perfect rousing and inspiring conclusion to the conference.

I’m confident that this conference will go a long way toward creating and strengthening a network of classical liberal reformers throughout Eurasia, all armed with practical information and advice on how to promote the rule of law, individual liberty, and peace. And I’m so, so, so happy about it — especially now that the work’s over.

I took the day off on Sunday and took a long trip with other foreign participants to Kakheti to visit ancient Georgian churches, see the countryside, and taste the local wines. The churches were remarkable, the countryside showed how important economic growth is and how much (it’s currently running about 11%) will be necessary to overcome the legacy of Soviet poverty (as shown by the ruined churches we visited). But the process is clearly underway, as evidenced by the rationalization of and improvements to the wine industry. In addition to the natural beauty and the remarkably hospitable people, the wine and food in Kakheti were excellent. (I’m a big fan of Georgian wines. They’re excellent. If you have a chance to try them, ask for the dry wines of Mukuzani or Sapaveri.)

Be Careful What You Wish For…

A couple of people over recent days have asked my opinion on the prospects for reform of agriculture policy should Democrats take over the House and/or the Senate. My usual reply is to lament the depressingly bipartisan nature of support for farm subsidies and trade barriers, and to also point out that the recent farm bill (implemented by a Republican congress) has been one of the most expensive in history: $23 billion last year. In a nutshell, I had thought that the prospects for reform could not be any worse under the Democrats than under Republicans.

It turns out that I may be wrong (yes, it happens occasionally). In a recent press release from Texas A&M University, the ranking member of the House Agriculture Committee (and probable chairman of that committee should the Democrats regain the majority in the House), Colin Peterson (D-MN) seems to support extension of the current farm bill, egregious though it is, but with yet more pork added.

Rep. Peterson would implement permanent crop disaster relief (I have blogged on this idea previously), and was indirectly quoted as calling renewable energy derived from crops ”the most exciting development in agriculture in his lifetime.”

Rep. Peterson does seem to have a point about the scope for the addition of expensive and agriculture-irrelevant rider amendments to ad-hoc disaster relief bills, but describing a permanent disaster relief program as a way to “save taxpayer dollars” is disingenuous, to say the least.

Rep. Peterson seems to have no truck with the idea that agriculture should contribute to deficit reduction, either: “I reject the idea that because we have a $9 trillion deficit, we have to get rid of farm programs. We didn’t cause that problem. In fact, agriculture was the only government initiative that actually spent less than was projected, $13 billion less so far. Besides, if you got rid of all agriculture programs, it wouldn’t make a dent in the deficit. So we need to do what’s right for agriculture, and that’s where I’m coming from.”

On ethanol, which my colleague Jerry Taylor has blogged about here, Rep. Peterson wheeled out the old “foreign oil dependency” issue and put his full support behind investing significant resources (that’s your resources) into more research into bio-fuels, describing the profits that investors are making currently from ethanol as “obscene.”

You said it, sir.

Mbeki Banned in South Africa

Not President Thabo Mbeki, of course. But his brother, the outspoken political commentator Moeletsi Mbeki, turns out to be one of nine people banned from the airwaves by the South African Broadcasting Corporation, which is, in the words of the Washington Post, increasingly “reverting to its apartheid-era roots as a tool for government propaganda.”

The new top news executive at SABC, Snuki Zikalala, is a former spokesman for the African National Congress-dominated government who “received his journalistic training in Communist Eastern Europe.” A new report says that he is responsible for the ban on nine government critics.

In the last days of apartheid, some libertarians pointed out to South Africa’s rulers that if they left a government broadcasting operation in place, they would one day regret the way a different government would use it. Looks like that day has come.

Meanwhile, you can’t hear Moeletsi Mbeki on South African radio and TV. But you can read his thoughts in this Cato Foreign Policy Briefing.

The End of Fidel Castro?

NPR has a report this morning that it’s looking more and more like Fidel Castro is terminally ill and will not return to power. NPR and Reuters both suggest that younger brother Raul Castro may open up the economy and even the political system to some extent.

Meanwhile, after 47 years of tyranny, some leftists still revere the Cuban dictator. A “colossal portrait” depicting Castro as “a champion of civil rights” will be unveiled in Central Park on November 8.