Tuesday, March 1, 2005

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March's Books of the Month

The international relations book is partially inspired by this Brad DeLong post. The highlights:

When economists talk about international trade and finance, they talk--first and most importantly--about building institutions to allow for mutually-beneficial acts of economic exchange. They talk about diminishing barriers and increasing confidence. They talk about playing positive-sum games with people in other countries that increase wealth, trust, and confidence and that ultimately align interests: the larger is the surplus from international trade and finance, the bigger is that stake that everyone has in continuing the free-trade-and-finance game....

Between 1850 and 1910--by accident--Great Britain built ties with the United States: economic ties, cultural ties, political ties of mutual deference where strategic issues were at stake. As a result, by 1910 Americans perceived Britain as their friend, and the British Empire as by and large a force for good in the world. This is in striking contrast to how Britain was perceived in 1850: the cruel corrupt ex-colonial power that had just starved a quarter of all Irishmen to death.

Now this mattered a lot.

This meant that when Britain got into trouble in the twentieth century--whether with Wilhelm II or Hitler or Stalin and his successors--it had wired aces as its hole cards in the poker game of seven-card stud that is international relations. The willingness of the United States to send Pershing and his army Over There, to risk war with and then to fight Hitler, and to move U.S. tanks from Ft. Hood, TX, to the Fulda Gap were all powerfully motivated by America's affinity with Britain, its geostrategic causes, and its security.

How does this apply to the present? It is obvious. Alexis de Tocqueville could project before the Civil War that the U.S. and Russia were likely to become twentieth-century superpowers. We can project today that at least one of India and China--perhaps both--will become late-twenty first century superpowers. We have an interest in building ties of affinity now. It is very important for the late-twenty first century national security of the United States that, fifty years from now, schoolchildren in India and China be taught that America is their friend that did all it could to help them become rich. It is very important that they not be taught that America wishes that they were still barefoot and powerless, and has done all it can to keep them so.

The fact that these issues are not even on the radar screen of the international relations community is indeed terrifying...

There's a fair amount to quibble with in this post -- Brad's statements about what diplomats want from trade is pure straw man; neither international relations scholars nor the foreign policy community is blind to the rise of China and India. Nevertheless, the point about U.S. economic openness yielding long-term policy dividends from rising great powers is spot-on.

So, this month's IR book is The United States and the World Economy: Foreign Economic Policy for the Next Decade, edited by C. Fred Bergsten of the Institute for International Economics. The book's precis:

What are the key foreign economic policy issues facing the United States in the second half of this decade? How can the administration and Congress meet the economic challenges that lie ahead? This new book analyzes the dramatic importance of the world economy to both the domestic prosperity and overall foreign policy of the United States, describes the new global environment (e.g., the rise of China as a global economic superpower and the completion of European unification) in which US policy must operate, and proposes major US initiatives on a wide range of international economic issues, including correction of the huge current account deficit, new trade negotiations, and energy.

Of particular interest was the chapter by Scott C. Bradford, Paul L. E. Grieco, and Gary Clyde Hufbauer on "The Payoff from Global Integration," in which the authors put a dollar value on the return from past and future trade expansion. Using different methods of estimation, they estimate that the cumulative payoff from trade liberalization since the end of the Second World War ranges between $800 billion to $1.45 trillion dollars per year in added output. This translates into an added per capita benefit of between $2,800 and $5,000—or, more concretely, an addition of somewhere between $7,100 and $12,900 per American household. As for the future, the gains from future trade expansion have been estimated to range between an additional $450 billion and $1.3 trillion per year in additional national income—which would increase per capita income between $1,500 and $2,000 on an annual basis. The fact is, there are few policies in the U.S. government’s tool kit that consistently yield rewards of this magnitude. [What about the costs in terms of jobs lost, etc.?--ed. Estimated as well -- a bit less than $60 billion per year. So there are costs, but they're much, much smaller than the benefits.]

The general interest book [WARNING: COARSE LANGUAGE AHEAD] comes courtesy of Kieran Healy:

Harry Frankfurt's On Bullshit. The first paragraph alone is priceless:

One of the most salient features of our culture is that there is so much bullshit. Everyone knows this. Each of us contributes his share. But we tend to take the situation for granted. Most people are rather confident of their ability to recognize bullshit and to avoid being taken in by it. So the phenomenon has not aroused much deliberate concern, or attracted much sustained inquiry. In consequence, we have no clear understanding of what bullshit is, why there is so much of it, or what functions it serves.

[Why buy the book when the whole text is online?--ed. Well, this is just me, but I love small books that can fit in one's pocket. More importantly, however, is that I'm traveling tomorrow and I'm already looking forward to reading the book on the plane just to see the reactions to the title. A printout just doesn't have the same punch.]

posted by Dan on 03.01.05 at 11:53 PM


posted by: addie on 03.01.05 at 11:53 PM [permalink]

Full text still cached by google

posted by: addie on 03.01.05 at 11:53 PM [permalink]

I thought the online article was expanded somewhat to make the book.

posted by: Anderson on 03.01.05 at 11:53 PM [permalink]

Well, the full text is not online anymore.

But Dan, why printouts? Weren't you shopping for a PDA?

posted by: fling93 on 03.01.05 at 11:53 PM [permalink]

"The fact that these issues are not even on the radar screen of the international relations community is indeed terrifying."

Nope - the fact that these issues are not on the radar screen of the international relations community is a blessed good thing.

Consider India - recipient of $100s of Billions in international aid and the full time attention of policy elites for 50 years post independence produced little more than throwing pebbles in the cean. 15 years of entrepeneurship by expat and overseas Indians, blessedly unaware of tho whole 'international relations community', has produced an economic boom that has lifted millions out of poverty and is changing every aspect of society - the first real changes since independence.

Foreign relations pros get in the way of developement by argueing for policies and programs that cater to the whims and prejudices of the academic and ruling elites, and not the entrepeneurs. Entrepeneurs by their nature are (ultimately) challengers to ruling elites, who love programs that can be turned into 'crony capitalism'.

Another example - Russia. Subject to vast attention by clver policy pros, it followed their reccomendations - and sank into cronyism and and corruption that paved the way for the current near-dictattorship.

Nothing helps African development more that the legions of cab drivers in the US, quitely subverting their local economies by putting US-earned capital to work in a thousand vilages (and educating their female relatives), more or less free of the horrible corruption and waste that turns officially approved development projects into sinkholes.

So everyone is better off without the attention of the policy elites, I say. More Kyoto treaties, anyone?

posted by: Jos Bleau on 03.01.05 at 11:53 PM [permalink]

Think Latin America- we can’t begin to seal off the Mexican border.
1. Pemex reports that production from its Cantarell field, the 8th largest in the world, is falling. The field has been in production since 1979 and brought glory days to Mexico. Pemex expects its output to decline by 5% to 2.0 mbpd in 2005. This field accounted for more than 60% of Pemex production in 2004. Pemex, the Mexican national oil company, provides 16% of the imports to the US—behind Canada and jockeying with Saudi Arabia for second or third place. Venezuela produces more oil than Mexico and has more reserves, but Mr. Chavez is busy making deals with China and dislikes the 2. US.
2. Venezuelan minister of energy and petroleum Rafael Ramirez announced today Monday that Venezuela is prepared to cause a "verdaderamente catastrófico" para la economía mundial.” Nonliteral translation: “If the US and its Colombian puppet keep harassing Venezuela, we’ll stop oil sales to the US and maybe we can push the cost of oil to $100 a barrel. That will bring economic disaster”. Iran has made similar threats. They are just hot air, so far.
3. Bolivia has problems. President Carlos Mesa says that he will resign, 1 ½ years after violent protests forced the resignation of President Gonzalo Sanchez de Lozada. Bolivia is the poorest country in the Americas, except for Haiti. Civil war there will not be good.
4. The US and China follow similar profligate courses, grabbing as much oil and gas as possible, refusing to admit that the old ways are unsustainable. Each superpower would be wise to attend to the needs and problems of its neighbors, and to start crash programs to develop alternative energy supplies. Americans and Chinese both believe that they are God's anointed people (American exceptionalism vs. Chinese exceptionalism- that’s why we are on a collision course). The US will sink into economic collapse if we continue to fight in the Middle East; we’ll remain in the Middle East as long as we’re addicted to petroleum. China has worse pollution problems than we do.

posted by: anciano on 03.01.05 at 11:53 PM [permalink]

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