Outsourcing Paul Samuelson

The grand old man of liberal economics speaks out, in the NYTimes. An excerpt:

[mainstream economists] are perpetrators of what Mr. Samuelson terms "the popular polemical untruth."

Popular among economists, that is. That untruth, Mr. Samuelson asserts in an article for the Journal of Economic Perspectives, is the assumption that the laws of economics dictate that the American economy will benefit in the long run from all forms of international trade, including the outsourcing abroad of call-center and software programming jobs.

Sure, Mr. Samuelson writes, the mainstream economists acknowledge that some people will gain and others will suffer in the short term, but they quickly add that "the gains of the American winners are big enough to more than compensate for the losers."

That assumption, so widely shared by economists, is "only an innuendo," Mr. Samuelson writes. "For it is dead wrong about necessary surplus of winnings over losings." Trade, in other words, may not always work to the advantage of the American economy, according to Mr. Samuelson.

Now, Mr. Samuelson has also recently endorsed John Kerry, so it appears he (Samuelson, not Kerry) is on a roll.

Another article, by Josh Bivens. A pretty reasonable treatment, considering it comes for the Center for American Progress.

Perhaps not surprisingly, K. Grease finds the response of Bhagwati, et al rather more convincing. Can we outsource Paul Samuelson to Bangalore, in exchange for some better code for MICROSOFT Service Pack II?

Biography as Politics

So....Kitty Kelly, well-known scholar, "reveals" that GWB did some toot at Camp David while Dad was Prez.

And....Bush may have failed to sign up for Reserves, breaking a promise.

Why aren't the Democrats running against that Bush did in the last three years? This other stuff just isn't getting any traction. Why are the obscure parts of the candidates' biographies so important? In Kerry's case, of course, the guy conducted an entire convention on a 7-month period 30 years ago.

At least looney-tune Senator Graham is jabbering about a conspiracy theory on something that happened in the last decade, instead of thirty years ago. There may be some evidence that this F9/11 style stuff has an effect.

Bloody Shirt? or Hair Shirt?

Why do the Republicans use Cheney so much in the campaign? His negatives are much higher, and his positives a little lower, than ever before.

If most people have decided, why parade this guy around? He will not convert anyone.

I think Cheney is a living, breathing bloody shirt. (As in "wave the bloody shirt"*see note below*, from the election of 1872). Waving the bloody shirt is an ancient Republican Tradition. Cheney has been beaten on so much by Michael Moore and the Dems that just seeing him walk around and smile makes the Republican partisans feel strong. "Look at this guy; he has a bad heart, he's bald as a m**********r, and he gets whacked on every talk show and news program by smug lefties! And he is unwavering in his support of the President! How can we falter, when we see such courage!" So why NOT parade him around? Since everyone has decided, he is not going to alienate anybody. Wave the bloody shirt, get "our" people out on election day! That's the only way I can understand what they are doing.

*NOTE on "wave the bloody shirt"*:
There was discussion through several years after 1876 on the origin of the red shirt as the uniform of the Democrats that year. The first red shirt shown, I believe, was that night in Charleston and on a Fifth Ward transparency. United States Senator Oliver P. Morton had delivered in the Senate a frantic and virulent denunciation of the treatment of the colored people by the Southern whites and dramatically produced and held up a crimsoned shirt which he said was from the body of a negro killed or cruelly whipped in Louisana. Democrats contended that the shirt was a fake and made much fun of it. "Waving the bloody shirt" was political slang for attempts to arouse sectional prejudice. Just before the Charleston parade Democrats somehow had intercepted a confidential letter from Judson Kilpatrick (Kill Cavalry) to Hayes, nominee for president, saying that nothing but "money and the bloody shirt" could carry Indiana Republican. It was in derision of this that the red shirt was flaunted in Charleston and later adopted as uniform. (Source)

I have seen other sources that say the election was 1872. But in all cases it was supposed to be the shirt of a black man, freed by the Civil War, but whipped to death in the reconstruction South.

Party Time

Whoa.

The Kerry video is actually pretty effective, for the Bush side.

But Bush himself...maybe not so effective for the Bush side.

The alternatives:
Ralph Nader, the "I love me, ME, ME!" Party
Michael Badnarik, the Libertarian Party
David Cobb, the Green Party
Walt Brown, the Socialist Party
Lord Sutch (posthumously), the Monster Raving Loonies party

Gouging....HOOAH....GOOD God, y'all....What is it GOOD for?

When I walk into a Circle K, to buy ice, is it because I love the owner and want to make sure he stays in business. Probably not; I walk in there to take advantage of him, because the value of the ice to me far exceeds the price he is charging.

And does Circle K man open his store out of love for me, out of concern for my welfare? He does not. He opens because the price he can charge for ice exceeds the cost of production, and he can make money.

In other words, we are taking advantage of each other, and both of us are better off. (Here is an ad, where Circle K advertises the fact that they have ice. Watch out for the bowling ball, tho!)

And....now? Millions in Florida are without power. And, therefore, without ice. That means lots of people want to buy ice. But, Florida has a robust anti-gouging law.

The result is that, if you wanted to drive to Florida with truckloads of ice, and try to sell it at the market price, you would be arrested. Does that make sense? Sure, the people who might drive down there with the much-needed ice are doing it out of greed. Who cares? The people buying it are doing THAT out of greed, too. They certainly aren't worried about truck man's welfare.

Outlawing price-gouging makes sense, if you think that statutes, and vague feelings that scarcity is somehow wrong, create reality. Me, I think that physical facts, like people's need for ice to save freezers full of soon-to-be-rotting food, matters more.

An excellent article on price-gouging after Charlie. And another article, for background. And, another, yet again. In the latter two articles, the claim is that citizens were "hit with price-gouging." No, no, no. Citizens were hit with scarcity, since there isn't enough stuff to go around. People who like price-gouging laws simply refuse to accept the physical reality of "not enough." Higher prices reflect scarcity, rather than cause it. And higher prices, if allowed to do their magic, might ameliorate "not enough."

(Yes, this rant continues K. Grease's previous rant. And I may rant about this again).

Why is it that knowledge of basic economics seems to be a bar to employment at the New York Times?

Bob Herbert, in his column today:

"American workers are in an increasingly defensive position. In a tight labor market, when jobs are plentiful, workers have leverage and can demand increased wages and benefits. But today's workers have lost power in many different ways - through the slack labor market, government policies that favor corporate interests, the weakening of unions, the growth of lower-paying service industries, global trade, capital mobility, the declining real value of the minimum wage, immigration and so on.

"The end result of all this is a portrait of American families struggling just to hang on, rather than to get ahead. The benefits of productivity gains and economic growth are flowing to profits, not worker compensation. The fat cats are getting fatter, while workers, at least for the time being, are watching the curtain come down on the heralded American dream."

Three points immediately occur:
1. If U.S. unions weren't so powerful, and the minimum wage weren't so high, then both immigration (to get jobs at artificially high wages) and out-sourcing (finding workers who will work at wages that are not so artificially high) would not be such a problem. Herbert's list confuses causes and effects. When I reread the list, I find it truly remarkable that someone with even a high school education could be so fundamentally confused.

2. There is a third group, besides workers and corporations, to consider. That is consumers. If you adjust for quality, and price, the chief beneficiary of productivity gains in the last decade have been consumers. So, as workers many people are little better off. But as consumers, their welfare is steadily improving. At least Marx was smart enough to study economics. Bob Herbert isn't even smart enough to study Marx.

3. This idea, constantly repeated by the hand-wringers and bed-wetters who don't understand capitalism, that the poor are not getting better off, is nonsense. Consider a form of analysis that focuses on individuals: a family comes to the U.S., puts down roots, learns the language, and moves up the economic ladder. Or, a family is born into poverty, works hard and saves, and sends kids to college. Over time, THAT FAMILY and its members get better off. (My family: mom and dad born into abject poverty, no one in family went to college. They scrimped, put three kids into private schools, and now all of us have graduate degrees and six-figure family incomes). That is the American dream; why doesn't it count for "the poor"? Because that family isn't poor any more! If you only focus on the "average" of "the poor", then of course that average is falling, because so many abjectly poor people are coming to the U.S. as immigrants, and people who were poor last generation are graduating to the middle class, where their higher incomes don't count in the average anymore.

If Herbert is right and "the poor" are getting poorer, why is it that so many poor people are becoming middle class? Why is it that so many truly poor people, in other nations, are risking their lives to come here? It is because the U.S. is the greatest wealth creation machine the world has ever known. The American dream is alive and well, unless you are a university professor or an ideology-blinded liberal columnist for the New York Times.

Dump Dumping, Redivivus: Amend the Byrd Amendment

The WTO is rightly yanking our chain over the infamous "Byrd Amendment." Now, you have to give him credit: Robert Byrd of WV moved to the "Vote for me, and I will give you other people's money!" platform years before the rest of the Democrats realized that, lacking actual ideas, they should do the same thing.

But this thing needs to go (the Amendment, I mean. Byrd....well, his continued success is explained by his "Porkman" superhero identity). (You might like CAGW's Byrd Droppings page). (And they say W smirks! Check this guy out....)



Interesting analysis (scroll to Aug 31, 2004 entry) by CATO's own Daniel Ikenson. An excerpt:

"By compensating petitioners and supporters of petitions, the Byrd amendment provides an additional financial incentive to file antidumping and countervailing duty cases,” remarked Ikenson. “Furthermore, by excluding from compensation those companies or unions not supporting the petitions, the law encourages companies that might otherwise decline to support petitions to do so simply to maintain eligibility for compensation.”

(Press release continues) While petitioning industries and their representatives tend to deny any linkage between the Byrd amendment and support for trade remedy petitions, the WTO case included as evidence a letter from a U.S. law firm urging a company to register
support for the countervailing duty case against lumber from Canada in order to qualify for Byrd amendment payouts.

“Despite opposition to the law at its inception from President Clinton and advocacy for repeal from President Bush, the U.S. Congress seems to have drawn a line in the sand over this issue,” Ikenson explained. “It is proving difficult to pry Congressional hands from a tool that allows them to quietly subsidize their business constituents. Unfortunately, the relatively low levels of retaliation authorized—about $150 million this year—will do little to inspire a change in that mindset.”

The dispute over the Byrd amendment is not an isolated event. There are a number of outstanding WTO rulings against U.S. laws and policies—including the Foreign Sales Corporation/Extraterritorial Income Tax provision and the Antidumping Act of 1916—that the United States has yet to implement. This mounting record of noncompliance must call into question the commitment of the United States to a rules-based trading system.

Those darned rules...they apply to everyone else, but not U.S., right?

U.S. Cellular Field, and the White Sox: Where America Lives

I bailed out from APSA and went to White Sox games. Italian sausage, beer, loud folks in the stands. A drunk guy ran onto the field, HOLDING A BEER ("I'd better take along something to drink, in case I get thirsty!"), and was still fast enough to elude the "security" guys. When they did run him down, they beat hell out of him, discreetly, with knees and elbows, right in center field. Actual holes in the turf where the carnage took place; guy was bloody. Great American entertainment.

Later, a Mariners batter got the high-n-tite treatment on a pitch, and fell on his back, hard. A fan a couple of seats to my right immediately yells (to the White Sox catcher): "Kick him! Kick him in the head!"

On the other hand, the Mariners' nonpareil, Ichiro, went five for five, and got a nice standing ovation from the White Sox fans. He tipped his hat. The four of us attending the game together agreed: with his off-balance stance and weak little swing, Ichiro will never succeed as a hitter.

Best moment of the two games I saw: White Sox bullpen is so bad, they fritter away a 8-3 lead. Bajenaru gives up hits and walks, until it's 8-5. Then the Sox management bring out their frisbee-throwing pet hamster, "Shingo" Takatsu. Big production: gongs, "Shingo Time!" on the big screen, loud music, Japanese characters on the really big screen. He has 15 saves for the year; some closers get that in a month. Of course, your team has to win to get a save, so maybe it isn't all Shingo's fault.

Shingo strikes out Edgar Martinez (Edgar: retire, please; this is embarrassing) on pitches that look like wads of tissue paper (Shingo's fastball is 89, if the radar is feeling friendly). Now there are two outs and the bases are loaded; Sox still up 8-5.

The Mariners' Ibanez creams a low liner to right, his third hit of the night. (This means that Shingo gives up two more runs, neither of them earned for him, because Bajenaru put them on base. Shingo is no bargain for other pitchers' ERAs). Two runs score easily, so it's 8-7. But, for some reason, Boone (who had been on first) decides he needs to be on third base. Why did he go for third, with two outs? He's already on second, in scoring position, with Bucky Jacobson, mountain-size phenom, coming to the plate. But Boone scoots for third, is thrown out by a step. The game is over, on Boone's boner. Shingo gets another save (now he has 16). The White Sox shoot off fireworks, and then there is a real fireworks display, made to seem less loud by the truly deafening "best of the 70s, 80s, and today!" pseudo-rock blaring from the speakers. An exquisite evening in the heartland.