Published: Wed, 22 Feb 2017 00:00:00 -0500
Last Build Date: Wed, 22 Feb 2017 12:04:36 -0500
Wed, 17 Dec 2014 17:15:00 -0500The New Republic (which, yes, still exists after the self-important fleeing of most of its staff after Franklin Foer ceased being its editor for the second time) takes an unsupportedly pants-wetting look at the frightening thought of free-market-y economic and legal reform in parts of the disaster zone of Honduras. I have reported and written extensively on this process, now going under the name ZEDE for "Zones for Economic Development and Employment," most recently in August and at most length in July 2013. The basic idea is carving out some territory in Honduras that could operate under fresh legal and economic rules, in the hopes that would spur economic growth above Honduras' current dismal record. TNR's absolutely nutty headline, ""I’ve Seen All Sorts of Horrific Things in My Time. But None as Detrimental to the Country as This," reflects the unfounded and indeed unexplained fears of veteran local journalist Sandra Maribel Sanchez quoted in the story, who seems to be driven to vapors at the thought that someone, somewhere could have a chance of a freer economy or better legal institutions in her homeland. (Vague talk of mafias run amok in a country already strongly riven by crime and violence, and fears of environmental degradation, are in the story, but otherwise even most of the Honduran voices in the story are at least guardedly pro-the ZEDE experiment, making the headline all the stranger.) Reporter Danielle Marie Mackey does a decent job on the history of the ZEDE idea and its complicated political process through the clotted Honduras system, giving fair voice to some of the ZEDE idea's defenders (though she overstates the role of economist Paul Romer, which is explained at length in my earlier reporting linked above). But her story is framed by its headline as a scared presentation of some un-scary facts: that there is a distant possiblility that some people and businesses in Honduras may get to function under legal and political rules that are different, and maybe more conducive to wealth-creation, than those ruining the country as a whole; and that some of the people involved in managing the process are avowedly pro-free-market. (As a fact-checking aside, Grover Norquist, one of the apparently scarily free market members of the Committee for the Adoption of Best Practices that is helping run the ZEDE process, is not a vice president of Polaroid, as the story states, and ZEDE intellectual pioneer Mark Klugmann's name has two ns at the end.) Mark Lutter, an econ student based in Honduras who works on the ZEDE process, in the PanAm Post critiques the attitude behind the TNR piece: Rich countries are rich because they have good institutions. Poor countries are poor because they have bad institutions. This is not some conspiratorial conservative viewpoint....Rather, that institutions matter is a consensus among economists. It is supported by some of the most cited economists: Daron Acemoglu and Andrei Shleifer, as well as numerous Nobel Laureates.... The basic problem is that Honduras, along with many other third-world countries, does not have functioning courts or police. Nor do they have basic rights to engage in commerce with others. If a Honduran wants to start a business, he must pay 39 percent of his per capita income, and he must wait 82 days to get the requisite construction permits. Economic growth is not possible without the creative destruction that comes with new businesses. Further, experiences around the world have shown that when a country or region adopts good institutions, economic growth follows. Hong Kong, Singapore, and Dubai are classic examples. China, following Special Economic Zones, and South Korea are two more.... Of course, this does not mean the ZEDEs will be successful. As in most third-world countries, as well as a number of first-world ones, corruption is always a problem. The ZEDEs might be used to enrich already wealthy politicians and their families. However, Honduras would not need ZEDEs if it already had good institutions. Th[...]
Wed, 06 Aug 2014 16:30:00 -0400Back in January, the new administration of Honduran President Juan Orlando Hernandez was hyping the possibility of what were now officially called Zones for Economic Development and Employment, or ZEDEs. The concept has been known by many names: charter cities, LEAP (for “Legal, Economic, Administrative, Political") zones, free cities, and startup cities. The general idea is creating zones within a country that can experiment with different economic, regulatory, and legal systems than the rest of the country—with the hope that these innovations might lead that sector to prosper more than the country at large. Honduras is—again—a step closer to creating such zones. As interviews in July with many people involved in the process or watching it eagerly for signs of real progress showed, it's still many steps away from them becoming real. (I wrote a feature for Reason’s June 2013 issue on the first rise, fall, and rise of the ZEDE concept in Honduras.) The need for some kind of extreme change in Honduran circumstances remains acute. Although President Juan Orlando Hernandez has been bragging that the murder rate in the first half of 2014 was lower than in the same period of 2013, Honduras is still a mess, still a major source of refugee children risking all to get to America, and as of this week is still earning huge New York Times features painting a horrific portrait of a land where nothing works, everyone is in peril, and everyone wants to leave. It's an anti-wonderland of lawless misery, where remittances from Hondurans who made it to the U.S. account for 20 percent of the entire national economy. As one observer of the ZEDE scene told me, it’s not surprising that the kind of radical, perhaps even desperate, experimentation that ZEDEs represent would get the most traction not in some place like Switzerland or Sweden, but a place exactly as troubled as Honduras, as a sort of Hail Mary pass to create some legal safety and economic sanity. Honduras might be getting there, however slowly. In May, the Honduran Supreme Court’s Constitutional Chamber gave the newest enabling legislation for the zones a thumbs up. The legal challenge against ZEDEs was joined by over 50 non-governmental organizations—the sort of national and international do-gooders that tend not to love the idea of more unrestricted free markets as a development solution—who framed their position as being against dreaded "foreign investors" winning control over parts of Honduras. In February, the government had already appointed members of the Committee for the Adoption of Best Practices, which will be responsible for setting forth specific details of the standards that entities wanting to operate a ZEDE must follow, and to appoint (and remove if they wish) the technical secretaries (who must be Honduran) managing specific existing ZEDEs. The Committee is also charged with hiring respected outside auditors for ZEDEs and assorted other managerial and inspecting duties for them. The group of 21 was specially selected for an understanding and appreciation of free markets. It includes free-market movement types like Alejandro Chafuen of the Atlas Network, Mark Skousen (who used to run the Foundation for Economic Education and runs the yearly "FreedomFest" in Las Vegas), and conservative movement organizer Grover Norquist. Norquist thinks that being too shockingly innovative in law or vaunting about its world-changing promise might not be the best way to launch the ZEDE concept. “You really want this to be understated, not overstated; underpromised, not overpromised. If you say we’re gonna change the world and create a million jobs, if that doesn’t happen in the first three months people will say, 'ah, it didn’t work!' You want everyone else to see it works so they say, 'why not have two?' instead of 'hey what’s that? Hope it doesn’t spread!'" The latest enabling legislation has many promising characteristics for those seeking political and market innovation. ZEDEs, it declares, ar[...]
Mon, 14 Jul 2014 20:20:00 -0400
(image) Tonight's episode of The Independents (Fox Business Network, 9 p.m. ET, 6 p.m. PT, with re-airs three hours later) begins with a topic that's gotten some play here today at Hit & Run: The latest Republican attack on the alleged "isolationism" of Sen. Rand Paul (R-Kentucky). Joining to discuss will be Party Panelists Michael Malice (insane person, Reason contributor) and Guy Benson (Townhall political editor). Those two are also slated to debate Sgt. Bowe Bergdahl's return to active duty, the mom who was jailed for letting her 9-year-old play unsupervised in the park, and the man who declared a wretched part of North Africa his own kingdom so he could appoint his daughter a princess.
Breitbart.com Senior Editor at Large Ben Shapiro will come on to talk about his "8 Reasons to Close the Border Now" piece; New York City Councilman Andy King will defend his proposal to require background checks on those creepy Times Square cartoon characters, Kmele Foster will (of course!) defend the Bolivian government's new law legalizing employment for 10-year-olds, and the co-hosts will chew on that great Reason-Rupe Millennials poll that we haven't talked about enough here on the blog.
AS IF THAT WASN'T ENOUGH, the online-only aftershow begins on foxbusiness.com/independents just after 10. Follow The Independents on Facebook at facebook.com/IndependentsFBN, follow on Twitter @ independentsFBN, tweet during the show & we'll use the best. Click on this page for more video of past segments.
Mon, 23 Sep 2013 11:23:00 -0400
Rock messiah Bono has some interesting things to say about his obligation to pay taxes to the utmost possible extent in Ireland, in The Guardian.
The interviewer asks Bono about:
the band's decision to offshore part of their income through the Netherlands to avoid tax. Was it not hypocrisy for you to try to hold the Irish government to account for its spending while going through fairly exhaustive efforts to avoid paying into the Irish exchequer yourself?
It is not an intellectually rigorous position unless you understand that at the heart of the Irish economy has always been the philosophy of tax competitiveness. Tax competitiveness has taken our country out of poverty. People in the revenue accept that if you engage in that policy then some people are going to go out, and some people are coming in. It has been a successful policy. On the cranky left that is very annoying, I can see that. But tax competitiveness is why Ireland has stayed afloat. When the Germans tried to impose a different tax regime on the country in exchange for a bailout, the taoiseach said they would rather not have the bailout. So U2 is in total harmony with our government's philosophy.
That might seem a trifle Jesuitical--the Irish government itself recognizes that people will make decisions about where their income is officially coming from based on tax policy, so we are of one mind on this!--but it's a start. Maybe someday a start toward "I have no moral obligation to let any government decide what to do with my justly earned income when I can make those decisions just fine myself, thank you."
I blogged last year about Bono's wising up about the vital importance of commerce and market capitalism for economic development. In this interview he makes a statement that an Ayn Rand would find very telling, not to say damning: "And though I believe that capitalism has been the most effective ideology we have known in taking people out of extreme poverty, I don't think it is the only thing that can do it, and in some ways I wish it wasn't." But it's nice he at least recognizes the reality of markets' benefits, even if not (yet) their morality.
Thu, 11 Jul 2013 14:00:00 -0400A version of this article ran in Barron's on Saturday, June 29, 2013. Click here to read the original. With the federal government willing and able to surveil every phone call made in the U.S., pump trillions of dollars into the economy via fiscal stimulus, bail out whole industries, and force all residents to buy health insurance by the start of next year, it sometimes seems that most of us have no real control over our lives. Sure, we can dress like slobs at work and get any number of coffee drinks at even the lousiest freeway rest stop. But when it comes to power, the folks at the top of the figurative pyramid seem to have even more control than when the Pharaohs were forcing us to build actual pyramids. Such fears are misguided, argues Moisés Naím in The End of Power: From Boardrooms to Battlefields and Churches to States, Why Being In Charge Isn't What It Used to Be, an altogether mind-blowing and happily convincing treatise about how "power is becoming more feeble, transient, and constrained." That's a good thing to Naím, the former editor of Foreign Policy who now hangs his hat at the Carnegie Endowment for International Peace. Naím defines power as "the ability to direct or prevent the current or future actions of other groups and individuals." Put that way, support for his thesis starts falling from the sky like rain in a tropical forest. Across the planet, governments are less able than ever to keep people within the artificial boundaries of nation-states. Despite the best efforts of protectionists, global trade and economic interdependence proceed apace, meaning that individual states have a tougher time calling the shots even within their own borders. The year 1977, notes Naím, "was the high-water mark of authoritarian rule, with 90 authoritarian countries," according to Freedom House's count. By 2008, there were only 23 authoritarian nations left. In the corporate world, of the top 100 companies on the 2010 Forbes 500 list, two-thirds were survivors from the 2000 list and one-third hadn't existed in 2000. Between 1998 and 2008, the top five motor-vehicle manufacturers in the world saw their combined market share decline from 54 percent to 48 percent. The author also shows how traditional, top-down, mega-organizations such as labor unions, school districts, charities, and organized religions are losing ground to smaller, nimbler arrangements ranging from worker co-ops to charter schools to micro-lending. Naím attributes the decay of power to what he calls the "more revolution," the "mobility revolution," and the "mentality revolution," each of which empowers individuals. These revolutions can be thought of as economist Joseph Schumpeter's "creative destruction" on steroids. Capitalism generally decentralizes power by disrespecting status, wealth, and tradition. As Marx and Engels put it memorably in The Communist Manifesto, under capitalism, "all that is solid melts into air, all that is holy is profaned…." In Naím's triple-M schema, increasing globalization and sharing lead people everywhere—including the very poor—to want more from their lives. The mobility revolution might have started with goods crossing borders but increasingly facilitates the movement of people, which in turn fuels a mentality revolution in which subjugation is not taken for granted. Especially among younger populations in openly repressive parts of the world such as the Middle East, people are more likely than ever "to question authority and challenge power." As important, new forms of communication—cellphones, computers, and the like—allow them to organize more effectively, further fracturing the exercise of power. While quite optimistic, Naím is no starry-eyed utopian. He identifies serious risks arising from the sputtering end of what passes for the old order. Since the start of the 21st century, for instance, the federal government has doubled its spending in nominal dollars, created t[...]
Wed, 26 Jun 2013 08:21:00 -0400
(image) I've got a new article up at The Daily Beast. It looks at what Edward Snowden's flight tells us about international politics - and how states actually wield less power than they used to (thank god).
Here's are some snippets:
As Edward Snowden lams it, his story is morphing from a new-media surveillance scandal into something closer to a classic Cold War thriller. The Snowden saga started off redolent of Girl With Dragon Tattoo (computer hacking, manifesto-style sloganeering about justice, rights, and corrupt goverments, and a half-naked dancer girlfriend). But it’s now driving deep into Graham Greene territory as the world’s most famous high-school dropout is reportedly seeking refuge in a left-leaning Caribbean banana republic run by a Hate-America-First autocrat. Call it Our Man in Quito: Cold War Redux....
What Snowden’s revelations—like those by WikiLeaks, Anonymous, and other, lower-tech channels—really underscore is what Moises Naim documents so powerfully and optimistically in his new book, The End of Power: “Power is shifting—from large, stable armies to loose bands of insurgents, from corporate leviathans to nimble start-ups, from presidential palaces to public squares. It has become harder to wield power and easier to lose it, and the world is becoming less predictable as a result. As people become more prosperous and mobile, they are harder to control and more apt to question authority.”
(image) It’s as likely as not that Ecuador’s Correa will turn on Snowden in relatively short order. Snowden has told the South China Morning Post that he plans on leaking more and more secrets about more and more countries over the coming months. How long will it be before he either reveals something unflattering about Ecuador or, same thing, inspires a citizen there to hack Correa’s own massive surveillance program? Today’s hacktivists—broadly defined to include social-media-savvy rebels such as China’s Ai Weiwei and Russia’s Pussy Riot—are nothing if not persistent. However unpatriotic they may be as citizens, they’re even more frustrating to governments as prisoners or honored guests.
Fri, 04 Jan 2013 13:10:00 -0500
"For a long time, people were not allowed to have dogs in the city, because that was also a capitalist indulgence," says Ying Ma, author of the memoir Chinese Girl in the Ghetto, which chronicles her childhood in China's final days of communism.
Ma's family lived through the crumbling of Maoism and the rise of economic liberalism, and talked with Reason TV about the dramatic changes that Chinese citizens saw in their everyday lives.
"For the first time, people got to choose where to work. For the first time, they got to choose where to live. For the first time, they actually got to choose what to buy on the market," says Ma.
Ma also discusses the future of the Chinese economy and explains why pundits like Thomas Friedman are mistaken to laud China's continued authoritarian rule.
About 8 minutes.
Interview by Nick Gillespie. Edited by Zach Weissmueller. Shot by Josh Swain and Weissmueller. Additional camera by Sharif Matar.
Scroll below for downloadable versions, and subscribe to Reason TV's YouTube Channel to receive immediate updates when new material goes live.
Fri, 04 Jan 2013 10:45:00 -0500
Daniel Drezner at Foreign Policy questions vague assertions that projecting U.S. power everywhere at crippling expense pays great dividends and finds some interesting things:
In the latest Foreign Affairs, Stephen Brooks, John Ikenberry, and William Wohlforth argue strongly in favor of "deep engagement." They proffer a number of reasons why the U.S. benefits from current grand strategy -- but one of the more intriguing ones is that the U.S. receives direct economic benefits from its security arrangements...
Brooks, Ikenberry et al. specifically talk about how the U.S. got Germany and South Korea to agree to economically beneficial policies by its security commitments. But Drezner says:
With respect to West Germany, it's certainly true that Washington was able to get Berlin to accommodate to U.S. preferences -- but only for a few years. The Bretton Woods system ended in 1971 because the Germans finally said "Nein!!" to U.S. inflation. So the economic benefit wasn'tthat great.
The South Korea case is more intriguing, because it's present-day and there's a real, live policymaker quote there. If a U.S. administration official asserts that the security relationship mattered, then it mattered, right?
Well.... no. We need to compare KORUS with something equivalent to provide a frame of reference. If security really mattered that much, then the Korea-United States free trade agreement should contain terms that are appreciably more favorable to the United States than those contained in, say, the Korea-European Union free trade agreement, which was negotiated at the same time. This is a great test. After all, the U.S. is the most important security partner for South Korea, whereas the only thing the European Union could offer to Seoul was its large market. So if Brooks, Ikenberry and Wohlforth are correct, the U.S. should have bargained for much better terms than the E.U. Right?
After going into the specifics of the trade deals in some detail, Drezner concludes:
the U.S. got better terms on the export sectors it cared about more, and the E.U. got better terms on the export sectors it cared about more. Both agreements are comprehensive in scope and contain roughly similar terms across most other sectors. Indeed, both the Congressional Research Service and U.S. Trade Representative's office acknowledge the basic similaritry between the deals, as well as the areas where the Europeans did better. So, in other words, America's ongoing security relationship with South Korea did not lead to any asymmetric economic gains.
U.S. throwing its military weight around the globe surely provides economic benefits to the people employed to run (and to be apologists for) that brand of expansive foreign policy, and to those who sell weapons and services to our military complex. But that is a different matter.
Wed, 12 Dec 2012 10:28:00 -0500The National Intelligence Council’s Global Trends 2030 report made news earlier this week for its forecast of a precipitous decline in America’s status as a sole superpower. From the report: How the United States’ international role evolves during the next 15-20 years—a big uncertainty—and whether the US will be able to work with new partners to reinvent the international system will be among the most important variables in the future shape of the global order. Although the United States’ (and the West’s) relative decline vis-a-vis the rising states is inevitable, its future role in the international system is much harder to project: the degree to which the US continues to dominate the international system could vary widely. The US most likely will remain “first among equals” among the other great powers in 2030 because of its preeminence across a range of power dimensions and legacies of its leadership role. More important than just its economic weight, the United States’ dominant role in international politics has derived from its preponderance across the board in both hard and soft power. Nevertheless, with the rapid rise of other countries, the “unipolar moment” is over and Pax Americana—the era of American ascendancy in international politics that began in 1945—is fast winding down. The evolution of U.S. power is one of six "game changers" the NIC identifies will affect global politics over the next twenty years; a crisis-prone global economy (which won't return to pre-2008 growth levels for "at least" the next decade), governments' inability to change as fast as the world, the potential for conflict caused by power-shifts, regional instability and new technologies. Those game changers are underpinned by the "megatrends" the NIC says will play out over the next decades: individual empowerment (see Declaration of Independents for more), diffusion of power, demographic patterns (the Western world is getting older while urbanization accelerates in the developing world), and increased global demand for food, water and energy (interconnected). From these sets of trends and variables, the NIC posits four potential futures: a “best-case scenario” of increased cooperation between the U.S., China and Europe as economic and security interests increasingly align, a “worst case scenario” of conflict and fragmentation in a stalled global economy, a scenario where political, social and economic inequalities work against integration and stability, and a scenario of the “nonstate world,” where: nonstate actors—nongovernmental organizations (NGOs), multinational businesses, academic institutions, and wealthy individuals—as well as subnational units (megacities, for example), flourish and take the lead in confronting global challenges. An increasing global public opinion consensus among elites and many of the growing middle classes on major global challenges—poverty, the environment, anti-corruption, rule-of-law, and peace—form the base of their support. The nation-state does not disappear, but countries increasingly organize and orchestrate “hybrid” coalitions of state and nonstate actors which shift depending on the issue. The NIC acknowledges the surveillance state: The widespread use of new communications technologies will become a double-edged sword for governance. On the one hand, social networking will enable citizens to coalesce and challenge governments, as we have already seen in Middle East. On the other hand, such technologies will provide governments—both authoritarian and democratic—an unprecedented ability to monitor their citizens. And of course, what prediction of the future would be complete without a word on the war on terror. It could, kinda, end: The current Islamist phase of terrorism might end by 2030, but terrorism is unlikely to [...]
Tue, 20 Nov 2012 13:31:00 -0500
(image) In September of this year, French President Francois Hollande unveiled a budget proposal designed to cut the country's annual budget deficit down to 3 percent of gross domestic product from its current 4.5 percent.
The main mechanism for closing the gap? Tax hikes on businesses and the wealthy, including a 75 percent tax on anyone earning over a million euros annually, as well as additional taxes on capital gains and dividends. The budget cut little in the way of public spending, however, and didn't make signfiicant reductions in the public sector workforce.
Top credit ratings agency Moody's isn't impressed. It just cut France's top credit rating, according to Bloomberg:
France lost its top credit rating at Moody’s Investors Service, which also maintained a negative outlook for Europe’s second-largest economy, citing what it called a worsening growth outlook.
France was cut to Aa1 from Aaa, the rating company said yesterday. The Moody’s downgrade follows one by Standard & Poor’s in January and increases pressure on President Francois Hollande to find ways to bolster growth.
“France’s fiscal outlook is uncertain as a result of its deteriorating economic prospects, both in the short term due to subdued domestic and external demand” and “structural rigidities” in the longer term, Moody’s said in a statement in Frankfurt.
Standard & Poor's kicked France's credit rating down a notch in January, so this isn't entirely unexpected. It is, however, a reminder of the dim prospects for growth in France, where unemployment is currently higher than it's been in more than a decade. Via The Guardian:
Defending the downgrade, Moody's stated: "France's long-term economic growth outlook is negatively affected by multiple structural challenges, including its gradual, sustained loss of competitiveness and the long-standing rigidities of its labour, goods and the service markets.
"France's fiscal outlook is uncertain as a result of its deteriorating economic prospects, both in the short term, due to subdued domestic and external demand, and in the longer term due to the structural rigidities noted above."
Officially, French public debt hit 91 percent of GDP this year, which is the level at which many economists say that debt has the potential to becomes a serious drag on a nation's economy. The U.S. is on track to follow, with public debt projected to hit 90 percent of GDP in the next decade under the Congressional Budget Office's alternative fiscal scenario.
Thu, 27 Sep 2012 22:44:00 -0400
The Obama campaign is leaning hard today into the theme of “economic patriotism”: Barack Obama calls in his 2-minute TV ad for a “new economic patriotism,” and the president used the term on the stump in Virginia.
It’s a phrase that captures the nationalistic, combative tone of the president’s reelection campaign, as well as the economic contrast the Obama team has tried to draw with Mitt Romney.
This isn’t the first time we’ve heard about “economic patriotism” in the 2012 campaign, or even in the month of September. Readers may recall that former Ohio Gov. Ted Strickland used the phrase to great effect in his speech to the Democratic National Convention.
Thu, 27 Sep 2012 12:58:00 -0400
UBS Bank gets set for Oktoberfest with a chart of beer affordability around the world. Using median income figures and prices for a pint, the chart calculates how long the Average Jose has to work in various countries to buy some suds. Raise your glass and chant "U.S.A.! U.S.A.!"
The Economist, where this chart appears, never seemed like a magazine for inexpensive beer drinkers. Neverthless, they may be overstating the price-per-hour slightly.
(image) U.S. median income is $50,054 per year. With a 40-hour work week over 52 weeks, that comes to about 40 cents a minute. A 24-pack of Miller High Life in my neighborhood comes to $15.99, which is quite a bit more than I prefer to pay, but nevertheless this comes to about 67 cents a can.
The UBS chart uses a 500-milliliter beverage, which is a little more than a pint. Even scaling up the size of the beer, that still means you can get the Champagne of Beers at a little less than 90 cents a can. (Do they even sell High Life by the pint? That seems kind of British.) So in reality, John Q. Public only has to work somewhere between a minute and a half and three minutes to quench the deep-down-body thirst we all feel after 90 seconds or so of concentrated labor.
The chart, however, has Americans toiling about six minutes per beer. Those are the kind of economics that could cost Barack Obama the election, unless they start serving Hamm's at those beer summits.
UBS has the unit "retail" price for the United States at what I presume is $1.80. That seems too cheap for a bar and too pricey for a supermarket. It's good to know our overpaid working slobs are getting great taste for their less filling career prospects, but let's face it: It's been downhill for this country ever since they stopped brewing Henry Weinhard's.
Update: National Journal shows how beer drinkers line up by party affiliation:
Tue, 11 Sep 2012 20:05:00 -0400
The (good, wealth-creating) properties of technological improvement allowing us to do more with less are clear even in faraway and mysterious China, even where labor costs are tiny compared to those in the United States.
Even though hourly manufacturing labor costs in China are only 4% of those in the US, it’s still attractive for Chinese factories to replace people with technology over time. This allows them to turn out more stuff with fewer people. How much more, and how many fewer?....
China’s manufacturing output was over 70% greater in 2008 than it was in 1996. Over the same period, manufacturing employment in the country declined by more than 25%.
Obviously, this is not because of outsourcing (companies outsource to China, not from China). It’s because technology is now so cheap, useful, and universally available that when more and more Chinese companies upgrade an old factory or build a new one, they don’t fill it up with cheap labor. They fill it up with hardware and software, just like we do in the US.
Thu, 14 Jun 2012 14:17:00 -0400
Economist David Henderson writes at The Freeman about the vital importance of liberalizing immigration policy to make a richer, better world. Highlights:
Relaxing immigration laws is the most pro-growth measure the rich countries’ governments could take. Not only would it enhance well-being in the rich countries, but it would also be the most effective antipoverty measure any wealthy country’s government could take....
There is copious evidence that people in poor countries—from engineers down to unskilled laborers—could earn three to ten times as much in the United States as they do in their home countries. If they were allowed to come to the United States, they would clearly benefit themselves. So, for example, there are people near starvation in Sudan, Haiti, and Cambodia who in the United States would earn what many of us would regard as a pittance but many of them would regard as riches....
When an American buys a service from an immigrant, it is not just the immigrant who gains. The American gains too, or else he wouldn’t have bought the service. Boston University economist Patricia Cortes, in a study published in the Journal of Political Economy, found that cities with larger influxes of low-skilled immigrants had lower prices for labor-intensive services such as dry cleaning, childcare, housework, and gardening. In a later study, Cortes and coauthor Jose Tessa found that these low-price services allowed Americans, especially women, to spend more hours working in high-skilled, high-paying jobs.
The gains from eliminating barriers to immigration are huge. In a recent article in the Journal of Economic Perspectives, economist Michael Clemens finds that getting rid of all immigration restrictions worldwide would approximately double world GDP.....
Still, relaxing immigration laws doesn't get nearly the respect of newer, sexier, less effective means of helping the non-American poor:
Immigration reform would dwarf any other measure economists have considered to help people in poor countries. Take microcredit, the lending of small amounts to small businesses. In his recent book, Borderless Economics, Robert Guest notes Harvard University economist Lant Pritchett’s observation that the average gain from a lifetime of microcredit in Bangladesh, such as that provided by Nobel Peace Prize winner Mohammed Yunus’s Grameen Bank, is about the same as the gain from eight weeks working in the United States. Asks Pritchett, “If I get 3,000 Bangladeshi workers into the US, do I get the Nobel Peace Prize?”
Reason's classic 2006 cover story "Immigration Now, Immigration Tomorrow, Immigration Forever."
Mon, 11 Jun 2012 10:10:00 -0400
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"What would have cost tens of thousands of dollars...can now be done for hundreds of dollars, so it's easier to fake stuff now," warns Roger Bate, resident scholar at the American Enterprise Institute (AEI) and the author of "Phake: The Deadly World of Falsified and Substandard Medicine."
Counterfeit, adulterated, or otherwise compromised prescription drugs are a major problem in Africa and a growing problem in the First World, argues Bate. In recent years, counterfeiters passed off hundreds of thousands of phony Lexapro pills around the globe and in 2008 at least 149 Americans died from fake Heparin, a blood-thinning drug. All told, says Bate, the number of deaths globally from ineffective drugs ranges from 100,000 to 1 million.
As drug production moves to China and other developing nations where oversight is tougher to maintain and more sales take place online where provenance can be tougher to ascertain, Bate says that the most viable solution is increased vigilance on the part of drug makers, providers, and patients alike. He looks forward to a fast-approaching world in which hand-held spectrometers verify pills on the spot and praises various online-pharmacy certification programs.
Referring to the classic 1949 film, "The Third Man," in which Orson Welles plays a drug counterfeiter whose watered-down penicillin in post-war Europe leads to the death of several children, Bate gives Hollywood credit for being well ahead of the curve on putting the spotlight on what he calls "the 2nd oldest profession."