Cato Daily Dispatch for November 21, 2005
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Bush Tries to Improve U.S.-China RelationsSlashing U.S. Farm Subsidies
D.C. Miscalculates Baseball Stadium's Price Tag
Bush Tries to Improve U.S.-China Relations
"President George W. Bush's visit to Beijing, which ended on Monday, had the trappings of a whistle-stop campaign appearance intended to sell his message that the United States wants China to free up its politics and economy before the two countries can move closer," reports Reuters. "But the closely scripted encounter between Bush and his Chinese hosts seemed to retrace, not narrow, the differences, analysts said."
In "Let Business Trump Quest for Dominance," James Dorn, a China specialist and Cato's vice president for academic affairs, writes: "If future U.S.-China relations are to improve, the prevailing zero-sum, mercantilist mentality must give way to a more positive way of thinking about economic relations and security. What China needs is less government and more markets. And the surest way to achieve that result is to strengthen the policy of engagement. Denying China access to our markets while requiring it to open its markets is hypocritical and will only play into the hands of hardliners who already distrust the U.S."
Dorn also explains why Washington's interference with the CNOOC-Unocal deal was unwarranted and hurts America in the long run in the Policy Analysis "U.S.-China Relations in the Wake of CNOOC." According to the author, "The United States needs to treat China as a normal great power, not as an adversary; ensure that only those commercial transactions that genuinely threaten national security are blocked; and recognize that by increasing economic freedom we increase personal freedom. Our economic security, as well as China's, will depend on sound free-market policies, not on destructive protectionism."
Slashing U.S. Farm Subsidies
"Amid signs of stalemate, U.S. negotiators are making a final push for a new global trade pact that could usher in the biggest changes in farm policy in decades," according to USA Today.
"U.S. Trade Representative Rob Portman last month offered to slash selected agricultural subsidies by up to 60% in return for Europe, Japan and others opening their markets to U.S. farm exports. The European Union responded with a mild tariff-cutting proposal that dashed hopes for a key gathering next month of trade ministers from the 148-nation World Trade Organization."
In "The High Price of Farm Policies," Daniel Griswold, Cato's director for trade policy studies, argues that reforming America's farm policies "would deliver lower food prices to tens of millions of American households, especially low-income families that spend a higher share of their income on food. Americans pay artificially high prices for sugar, milk, butter, cheese, peanuts, beef and orange juice. Last year, according to the OECD, U.S. farm programs transferred $16.2 billion from U.S. food consumers to producers. That amounts to a regressive annual 'food tax' on the typical American household of $147.
"[R]educing farm subsidies would [also] save U.S. taxpayers tens of billions of dollars during the next decade. The first three fiscal years following the enactment of the 2002 farm bill have seen an estimated $55.5 billion spent on farm subsidies already. While Republican leaders in Congress say there is no fat left in the budget to trim, farm subsidies provide an obvious target for savings. And many of those subsidy payments currently go to large farms and agribusinesses, not to smaller 'family farms.'"
D.C. Miscalculates Baseball Stadium's Price Tag
"[Washington, D.C.'s] government significantly underestimated the price of a state-of-the-art stadium for the Washington Nationals and as a result has been forced to shift $55 million set aside for infrastructure improvements to cover escalating costs," the Washington Post reports.
"City officials had included money to repave roads and expand a Metro station near the stadium in the $535 million budget approved by the D.C. Council last year. Those funds now will go instead toward labor and building materials and to cover the cost of land for the stadium, which also is more expensive than anticipated."
In the Cato Briefing Paper "Caught Stealing: Debunking the Economic Case for D.C. Baseball," economists Dennis Coates and Brad R. Humphreys argued that a taxpayer-subsidized ballpark for Washington's new baseball team would not improve the district's economy. They examined all 37 U.S. cities that had one or more professional football, basketball, or baseball teams between 1969 and 1996. Their findings suggested that the District can expect at best no economic impact and at worst a negative effect on the local economy.
Coates and Humphreys found that the presence of pro sports teams: (1) had no measurable positive impact on the overall growth rate of real per capita income; (2) had a negative impact on the level of real per capita income; (3) had a negative effect on the retail and services sectors of the local economy; and (4) tended to reduce wages in eating and drinking establishments by about $162 per year.
Greg Garner, editor, ggarner@cato.org