Monday, February 7, 2011

Monday Quick Hits

Here are a few headlines to quell your Super Bowl / Reagan birthday hangovers:
  • In a great new op-ed, the Boston Globe's Jeff Jacoby explains the current dominance of American manufacturing.  He concludes: "A vast amount of 'stuff' is still made in the USA, albeit not the inexpensive consumer goods that fill the shelves in Target or Walgreens. American factories make fighter jets and air conditioners, automobiles and pharmaceuticals, industrial lathes and semiconductors. Not the sort of things on your weekly shopping list? Maybe not. But that doesn’t change economic reality. They may have 'clos[ed] down the textile mill across the railroad tracks.' But America’s manufacturing glory is far from a thing of the past." Mark Perry has more here.
  • Tim Carney reports on yet another highly-subsidized green energy bankruptcy.  As I've noted repeatedly, the United States is absolutely awesome at producing green energy debacles.  Carney reports: "To turn wood chips into ethanol fuel, George W. Bush's Department of Energy in February 2007 announced a $76 million grant to Range Fuels for a cutting-edge refinery.  A few months later, the refinery opened in the piney woods of Treutlen County, Ga., as the taxpayers of Georgia piled on another $6 million.  In 2008, the ethanol plant was the first beneficiary of the Biorefinery Assistance Program, pocketing a loan for $80 million guaranteed by the U.S. taxpayers.  Last month, the refinery closed down, having failed to squeeze even a drop of ethanol out of its pine chips.  The Soperton, Ga., ethanol plant is another blemish on ethanol's already tarnished image, but more broadly, it is cautionary tale about the elusive nature of 'green jobs' and the folly of the government's efforts at 'investing' -- as President Obama puts it -- in new technologies."
  • WTO Director General Pascal Lamy continues to beat the trade statistics drum:  "Another significant change in the international trade landscape is the spread of globally-integrated production chains — in effect, global factories — as firms locate various stages of the production process in the most cost-efficient markets.... The sports equipment industry is another example that typifies the new global production network pattern. For instance, the blueprint of a sport shoe is designed and conceived in a research lab in the United States, but manufactured in factories located in China, Vietnam or Indonesia, using raw materials such as leather, rubber and plastic from neighbouring Asian countries. You locate the different stages of your activities from creation to production, marketing and distribution in order to maximise efficiencies and optimise your value addition chain."
  • Behold, the depressing state of trade policy/politics in the Democratic Party. "The Democratic Leadership Council, the iconic centrist organization of the Clinton years, is out of money and could close its doors as soon as next week, a person familiar with the plans said Monday." As you may recall, the DLC has in recent years often been the lone Democratic voice in favor of trade liberalization.  So how many columns will be written about "epistemic closure" on the Left?  (Obvious answer: none.)
  • Big free market think tanks oppose extension of Trade Adjustment Assistance (which Congress is mulling this week).  First, Heritage's David Mulhausen shows that "TAA is ineffective in raising the wages of participants" and thus should die.  His colleague James Skerk adds more, arguing that Congress should let the program expire because "very few workers lose their jobs because of foreign trade, and the Department of Labor’s Dislocated Workers Program already provides basic services to laid-off workers."  Finally, Cato's Sallie James provides three good reasons why TAA deserves the axe: (i) very few people lose their jobs due to import competition; (ii) it costs a fortune ($2.4 billion in 2011!); and (iii) as the trade stagnation/regression of 2006-2010 proves, TAA has done nothing to convince trade skeptics to support liberalization initiatives.  I'd only add - as Sallie's 2007 paper on TAA notes - one more big reason why TAA stinks: it reinforces the (false) idea that imports are bad, and that trade is zero sum. For more on that point, I highly recommend this classic NYT op-ed by economist Steven Landsburg on the subject.  He notes: "One way to think about [TAA] is to ask what your moral instincts tell you in analogous situations.  Suppose, after years of buying shampoo at your local pharmacy, you discover you can order the same shampoo for less money on the Web.  Do you have an obligation to compensate your pharmacist?  If you move to a cheaper apartment, should you compensate your landlord?  When you eat at McDonald’s, should you compensate the owners of the diner next door?  Public policy should not be designed to advance moral instincts that we all reject every day of our lives."  Amen.
  • Via the Kauffman Foundation's Tim Kane comes today's Chart of the Day on real GDP per capita.  Kane notes, "It shows international comparisons of real GDP per person which come from the Penn World Tables (mark 6.3, chain weighted), relative to the United States level. Notice how developing countries tend to converge toward the U.S. level, then crash back to the European norm of a 70-80 percent ratio.... I find that this chart is especially useful for keeping China fever in perspective.... To be fair, China is big, so it can have an immature economy and still throw a lot of weight around. But history says it, too, will have a very hard time making the transition to a mature economy, let alone an entrepreneurial one."

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