Friday, October 6, 2006

Matthew Yglesias drinks wine; I drink pink lemonade

My latest bloggingheads diavlog -- with Matthew Yglesias -- is now available online. Matt's beverage of choice is wine -- mine is lemonade.

The topics covered include:

1) Is Mark Foley really such a bad guy?

2) What's North Korea up to?

3) What's the fairest grand strategy of them all?

4) Why the new forms of watching TV are like crack?

5) How to talk about Bob Woodward without reading Bob Woodward.

As Matt says in the closing, he goes soft on Foley; I go soft on Wodward.

And, as I said in the diavlog, everyone reading this blog should go online and check out the pilot episode of Friday Night Lights. The entire show is shockingly good -- particularly Connie Britton

posted by Dan at 08:59 AM | Comments (8) | Trackbacks (0)

Let's stop the hyperventilating about Hugo Chavez

Earlier this week Clay Risen wrote an alarming story for TNR Online about Hugo Chavez's threat to the liberal world order:

Far from being a pariah, Venezuela is increasingly in step with the world. Thanks to deep wells of anti-Americanism and Chávez's dogged diplomacy among the developing world, he's managed to build a large, loose coalition of states aligned not just against the United States, but against the liberal world order that is the real bedrock of American hegemony. Chávez's goal is not to destroy the American economy--cutting off our supply of oil from Venezuela would do more harm to Caracas than to us--so much as to replace the structures by which we hold sway over the world economic community. And while it makes headlines to talk about Chávez's military (and paramilitary) aspirations, his real successes--and his real threats--exist in the economic, rather than the military, realm....

too many parts of the world are seeing uneven internal growth (benefiting the elite but not the general public) or no growth at all, even as they make painful budget reforms and market concessions. This breakdown has given rise to a powerful challenge to the liberal economic order--at the center of which sits Hugo Chávez.

The most significant challenge, arising from the slow collapse of the WTO's Doha Round of trade negotiations, is Venezuela's plan to replace the international trade structure with a series of trading blocs. Many of its efforts have been the banal sort of bilateral deals that would go unnoticed--if they weren't with an eyebrow-raising set of partners: Vietnam, Nicaragua, Russia, Libya, and other countries at the edges of the liberal economic order. Just days before his U.N. appearance, Chávez signed some 20 trade accords with Iran, totaling more than $200 million. Iranian tractors are already under production in Venezuela, and the Iranian national oil company has spoken of investing up to $4 billion there. Chávez has promised a $500 million oil refinery in Uruguay, a country the United States has been courting for its own trade deal. And he has pursued countless oil-related deals with China--with the expressed goal of disengaging his country's oil sector from the United States.

Alongside his bilateral efforts, Chávez has pursued a set of multilateral trade agreements with the intention of displacing American economic hegemony in the western hemisphere. In 2005 Cuba and Venezuela created the Bolivarian Alternative for the Americas (ALBA), also known as the People's Trade Agreement, which sets up zero-tariff trade among members. The ALBA has since expanded to Bolivia, and Nicaraguan presidential candidate Daniel Ortega has promised to join if he wins in November. Chávez has also signed onto Mercosur, the pact among several South American countries designed to challenge NAFTA and the EU. Mercosur is, for now, a fairly innocuous group, but Chávez has spoken frequently of transforming it into an anti-U.S. regional bloc. Trading blocs such as these, especially in light of the Doha collapse, not only undermine the structure and spirit of the liberal trading regime, but they also push the world back to the era in which politics, rather than growth-oriented national interest, determined trade policy, with all the economic and political instability that went with it.

Look, I can doom-and-gloom the demise of freer trade with the best of them, but in the thinking about existential threats to the world trading system, Hugo Chavez does not come to mind.

The key facts about Chavez's policy initiatives are as follows: 1) Sure, Chavez has signed a lot of trade deals -- but most of them are of the pissant variety. $200 million? Big whoop.

2) Sure, Chavez wants to diversify his imports and exports away from the United States -- but he's not going to succeed.

3) Sure, Chavez wants Mercosur to do his bidding -- but he can't, since Brazil is the key veto player in that trading bloc. Lula might not be America's biggest fan, but he's not really anti-American either.

4) For all of Chavez's wheelings and dealings, his foreign and economic policies alienate more politicians that they attract.

Hugo Chavez is an irritant, but it's silly to paint him as the big bad wolf of the global political economy.

posted by Dan at 08:43 AM | Comments (14) | Trackbacks (0)

Thursday, October 5, 2006

So what's going on in Ukraine?

Crooked Timber's Maria Farrell went on a study tour organised by the 21st Century Trust and the John Smith Memorial Trust to see what's going on in Ukraine nearly two years after the Orange Revolution. The group decided to create their own blog to record their thoughts on the trip.

If you're interested in the country, go check it out.

posted by Dan at 11:19 PM | Comments (0) | Trackbacks (0)

Wednesday, October 4, 2006

The most interesting spin control of the year

Rep. John Shimkus (R-Ill.) has come up with an interesting line of argumentation to protect himself from the Foley fallout: From Ray Long's story in the Chicago Tribune:

The Illinois lawmaker who oversees the Congressional page program said Wednesday that teens who participate are "safer in our program than in a lot of homes."

Rep. John Shimkus (R-Ill.) defended his actions as chairman of the page board in an interview with the Tribune on Wednesday, saying he moved quickly to confront former Rep. Mark Foley of Florida based only on information about 2005 e-mail traffic that wasn't sexually explicit.

Shimkus acknowledged he did not ask Foley if there were any other electronic exchanges with pages, such as the sexually suggestive instant messages from 2003 that first surfaced on Friday and led to Foley's swift resignation.

"The thing that's frustrating to me is that I'm not the bad guy here," Shimkus said. "Leadership's not the bad guy. The bad guy is whoever had these explicit instant messages that were done in 2003 and held them. That's the bad guy.... because those instant messages are what put these kids at risk."

He insisted the page program is safe. "They are as safe there as they are at home," he said. "In fact, in a lot of homes—they're safer in our program than they are in a lot of homes." (emphasis added)

Am i reading this incorrectly, or is Shimkus actually claiming that large numbers of parents of being so negligent that they'd be more likely to overlook a sexual predator than the United States Congress?

posted by Dan at 11:22 PM | Comments (14) | Trackbacks (0)

So much for Ahmadinejad's soft power.

It appears that Mahmoud Ahmadinejad's performance for the past year has disenchanted some Iranians:

While President Mahmud Ahmadinejad is busy running a high-voltage campaign against the United States and its policies, Iranians are wondering whether he will ever make good on election promises to crack down on corruption and distribute Iran's vast oil revenues more equitably.

"My whole family voted for Ahmadinejad because he promised to improve our lives. He said he was going to fight corruption and create jobs. He said oil money belonged to the people. I haven't seen any of the oil money in my house yet, but I have to deal with the ever increasing prices anyway," said a a 67-year-old pensioner who asked to remain anonymous. "I'm running a family of three on less than US$220 a month and the price of the cheapest cut of meat is $6 per kilogram. Thank God I'm not paying rent or we wouldn't have anything to eat."

A political analyst in Tehran said: "Dissatisfaction with the administration of President Ahmadinejad is not yet widespread, but it is growing fast. The hardline government that outran reformists on a plank to check inflation, lift living standards, create employment, and take a bite out of the corrupt and the rich and give it to the impoverished has not only failed to deliver those promises, but has clearly moved in the opposite direction."....

"Results of an opinion poll reported by Mehr News Agency in September show that in May, 61% of those asked found his team successful in the nuclear issue, 44% in managing inflation and only 37% in fighting corruption.

"The report doesn't mention percentages but says those asked consider unemployment and inflation the administration's most urgent problems. It seems Ahmadinejad has concentrated his efforts more in foreign policy rather than in the more challenging economic arena."....

Economic indicators now show a huge decrease in the stock-market value and private banks claim they are on the brink of bankruptcy resulting from lowered interest rates. The inflation rate is said to be just above 12% now, and is forecast to rise to 14% or 15%. There is a huge budget deficit, amounting to $8 billion. Even Iran's top judiciary has warned about capital drain. The highly subsidized, oil-revenue-dependent Iranian economy is struggling with inflationary stagnation, they believe.

"It's still too early to make a good assessment of the government's economic performance, but some of the contradictions resulting from lack of a clear economic theory are already becoming evident," said Saeed Leylaz, an economic analyst in Tehran....

Leylaz added: "On the other hand, the government's slogans and its domestic and foreign policies have scared away investment. The stock market has lost 50% of its total value compared to its peak time."

The huge amount of subsidies paid by the government is widening the gap between the rich and the poor, economists warn.

"The Iranian economy will be injected with around $50 billion worth of subsidies this year," Leylaz said. "But it will do little to help the poor. Fuel subsidies comprise one-third of the total subsidies paid by the government, and more than half the fuel subsidies, for example, will find their way into the pockets of the top 10% of the population who have and use cars, meaning that the top 10% are getting one-sixth of all subsidies.

Other polls seem to generate similar results: "Last year Ahmedinejad’s approval rating was 60%. Now it is down to 35%."

These findings suggest to me two things: 1) Fareed Zakaria might be onto something.

2) If push comes to shove, the administration is wrong to reject gasoline sanctions. Those sanctions would bite the precise segment of the population that benefits from Ahmadinejad's regime.

posted by Dan at 06:26 PM | Comments (6) | Trackbacks (0)

The quickest way to dynamite the WTO out of existence

The Center for Global Development's Lawrence MacDonald blogs about Joe Stiglitz's new idea to scupper the WTO make trade "fairer":

Nobel laureate Joseph Stiglitz urged at a CGD event that U.S. trade partners ask the WTO for authority to impose countervailing duties on exports of U.S. steel and other energy-intensive products that benefit unfairly from Washington’s refusal to join the Kyoto Protocol limiting carbon and other greenhouse gasses....

"One of the main purposes of the WTO is to create a level playing field; subsidies distort the playing field, which is why countries are allowed to offset subsidies through countervailing duties," Stiglitz explains in Making Globalization Work, the new book he was promoting at the CGD event. "This should be the case for hidden subsidies—not forcing firms to pay for the environmental damage they inflict—as well as for open subsidies."

The book contains a detailed explanation of the proposal--and an interesting discussion of the response his idea has received so far from senior officials:

I have discussed this idea with senior officials in many of the advanced industrial countries that are committed to doing something about global warming. And while, almost to a person, they agree with the analysis, almost to a person they also show a certain timidity: the proposal is viewed by some as the equivalent, in the trade arena, of declaring nuclear war. It is not. It would, of course, have large effects on the United States, but global warming will have even larger effects on the entire globe. It is just asking each country to pay for the full social costs of its production activities. Following standard practice, the pressure of trade sanctions could gradually be increased; and almost surely, as America recognizes the consequences, its policies would be altered--as they have been in other instances where the United States has been found in violation of WTO rules.
For a full transcript of Stiglitz's talk, click here. For an article-length treatment by Stiglitz, click here.

Stiglitz's proposal probably would improve the global warming situation -- but not the way he thinks. Assuming the WTO Appellate Body was willing to destroy itself, here is the chain of events that would improve the environment:

1) The WTO rules against the U.S.A.;

2) The U.S. refuses to comply, thereby weakening respect for the WTO's Dispute Settlement System;

3) As the Trade Diversion blog suggests, "once the litigation gates open, "hidden subsidy" will be a phrase that lawyers and protectionists love. Is the absence of labor standards in developing countries a "hidden subsidy" to exporters of labor-intensive manufactures?.... Costs are subjective; social costs doubly so." So, expect Canadian, American, Japanese, and European trade officials to file suit in the WTO over every "hidden subsidy" under the sun. Expect the target of a lot of these suits to be China?

4) The WTO, burdened by the collapse of the Doha talks and persistent noncompliance of dispute rulings, collapses.

5) The absence of multilateral trade rules encourages the emergence of economic blocs, as governments start applying "social tariffs" against countries that don't share their regulatory aims.

6) The ensuing, protracted slowdown in the global economy leads to significant reductions in CO2 emissions.

I'm thinking that there are better ways to solve the global warming problem.

This, by the way, is one of the basic problem I find with the parts of Making Globalization Work that I've read. There is a decent diagnosis of some of the ills caused by globalization -- but for a man who spent the past decade and a half in policymaking circles, he seems oddly oblivious to the massive political externalities many of his proposals would create.

UPDATE: My colleague Joel Trachtman explains why Stiglitz's plan is a legal non-starter.

ANOTHER UPDATE: Greg Mankiw critiques another of Stiglitz's policy prescriptions.

posted by Dan at 10:22 AM | Comments (2) | Trackbacks (0)

Tuesday, October 3, 2006

My one post about Mark Foley

It's time for this blog to stop talking about sexy topics like trade policy and move to the serious, weighty, and potentially boring question of whether former U.S. Rep Mark Foley committed the legal act of pedohpilia or was just plain creepy.

Actually, let's leave that question to Andrew Sullivan and Matthew Yglesias. The best thing I've seen in the blogosphere on the Foley fall-out comes from this Robert George post.

Question to readers: will Mickey Kaus' Feiler Faster Thesis apply to the Foley scandal? In other words, will this still be an issue come Election Day?

UPDATE: Oh dear, this AP story is close to Hastert's worst nightmare:

A senior congressional aide said Wednesday he told House Speaker Dennis Hastert's office in 2004 about worrisome conduct by former Rep. Mark Foley with teenage pages -- the earliest known alert to the GOP leadership.

Kirk Fordham told The Associated Press that when he was told about Foley's inappropriate behavior toward pages, he had "more than one conversation with senior staff at the highest level of the House of Representatives asking them to intervene."

The conversations took place long before the e-mail scandal broke, Fordham said, and at least a year earlier than members of the House GOP leadership have acknowledged.

Fordham resigned Wednesday as chief of staff to Rep. Thomas Reynolds, R-N.Y.

Hat tip: Andrew Sullivan.

posted by Dan at 09:50 PM | Comments (18) | Trackbacks (0)

What I asked the USTR

When we last left your humble blogger, he was heading to DC to talk about trade with U.S. Trade Representative Susan Schwab and a few other folks at an AEI conference.

Alas, I was unable to access the internet this morning, and so had no opportunity to view the range of questions that I could relay one to the USTR (it would have been Zathras'). However, the following exchange did take place:

ME: There seems to be a catch-22 on reviving Doha. Other countries won't negotiate seriously with the United States unless they believe that we can get TPA renewed. At the same time, the only way that TPA is likely to be renewed is if Congressmen seen the outline of a Doha deal. How does one escape this conundrum?

SCHWAB: Good question. [Long pause.]

So, call me skeptical on the odds of Doha being completed anytime soon. I should stress that this isn't Schwab's fault... it's the hand she was dealt.

One last thought: As David Kane has observed, both Schwab and I are graduates of Williams College. When I was intriduced to the ambassador, I mentioned that we shared the same alma mater. And, for just a brief second, the wised-up, cautious face of a politician was replaced by the joyful look of recognition when one Eph recognizes another Eph.

posted by Dan at 07:54 PM | Comments (1) | Trackbacks (0)

Monday, October 2, 2006

Submit your question to the U.S. Trade Representative!!

Tomorrow I'll be a panelist for an AEI symposium, "The World Trading System after the Collapse of Doha: The WTO, Developing Countries, and Regionalism." The highlight will be a speech by the Honorable Susan C. Schwab, U.S. Trade Representative.

Other panelists include former under secretary of Commerce Grant D. Aldonas, AEI's Claude E. Barfield, former undersecretary of State Alan P. Larson, And Georgetown law professor Daniel K. Tarullo.

I believe I'll be dining with the USTR before her speech. So, readers are encouraged to submit concise, issue-appropriate, and polite questions to pose during the lunch hour.

UPDATE: OK, the lunch is over -- I'll be posting an after-action report later this evening.

posted by Dan at 04:37 PM | Comments (11) | Trackbacks (0)

Sunday, October 1, 2006

Does America have a social policy deficit?

I just noticed that Francis Fukuyama sorta joined the blogosphere -- he's occasionally posting over at The American Interest's blog.

In this post from last month, he issues a provocative question that remains relevant:

What is it that leaders like Iran’s Ahmedinejad, Hezbollah’s Nasrullah, and Venezuela’s Hugo Chavez have in common that vastly increases their local appeal? Anti-Americanism and an aggressive foreign policy are of course components. But what has really allowed them to win elections and cement their support is their ability to promise, and to a certain extent deliver on, social policy—things like education, health, and other social services, particularly for the poor. Hugo Chavez has opened clinics in poor barrios throughout Venezuela staffed with Cuban doctors; Hezbollah has offered a complete line of social services for years and is now in the business of using Iranian money to rebuild homes in the devastated south of Lebanon. Hamas in Palestine, the Muslim Brotherhood in Egypt, and Evo Morales in Bolivia all have active social agendas. Organizations like Hezbollah and Hamas do not merely lobby the government to provide social services; they run schools and clinics directly while out of power.

The United States and the political groups that it tends to support around the world, by contrast, have almost nothing to offer in this regard. Washington stresses democracy and human rights—that is, procedural safeguards that institutionalize popular sovereignty and limited government—as well as free trade, with its promise of economic growth. This is a good agenda in line with American values, and it has worked well in Eastern Europe, East Asia, and elsewhere. But it tends to appeal to middle-class, educated constituents. In those parts of the developing world that suffer from deep social cleavages and inequalities, free elections and free trade have relatively little resonance for the great majority of the population that is poor....

Washington has lots of advice to give developing countries on economic policy, in terms of deregulation, privatization, reduction of tariff barriers, and the like. But there is no equivalent of the “Washington Consensus” on how to help Bolivia or Pakistan or Egypt improve its primary education system, or how to get health services delivered more efficiently in poor neighborhoods.

The United States and its liberal democratic friends around the world need to start thinking seriously about a social agenda that will appeal to the poor if they are ever to compete successfully with the Islamists and populists of the world. This is not a call for a return to the old social democratic agenda of the 1950s and 60s.... But all governments have to provide social services, and it is important to figure out how to do this well rather than poorly.

I do think Frank is overstating the problem here. First, it shouldn't be that shocking that local leaders have the ability to craft social policies that resonate better in the short run than the United States.

Second, all you have to do is read Bill Easterly to become immediately wary of anything that smacks of a "Wasington Consensus" on health and education in the developing world. I'm pretty confident that such an animal does not exist.

Third, and most important, the one element that would belong in anything resembling a Washington Consensus on social development would be an intensive focus on educating women and providing them with greater health choices. How many conservative societies in the developing world are going to be truly receptive to that kind of program?

Finally, one of the few Bush administration policy innovations that does get kudos across the ideological spectrum is the Millennium Challenge Corporation. No one pays attention to it, however. Why? Well, it's been a bit slow in dispensng aid, and, oh, yes, there's Iraq.

That's the thing about big foreign policy screw-ups -- unfortunately, all the soft power in the world can't erase them.

posted by Dan at 11:04 PM | Comments (7) | Trackbacks (0)

The CPI bias at work in Burger King

For the past six weeks or so there' been an egaging, intermittent blog debate about CPI bias. That is, to what extent has technological innovation improved standards of living so much that the effects are understated in measuring year-to-year or decade-to-decade comparisons of the U.S. economy -- and whether, concomitantly, inflation measures lke the Consumer Price Index are overstated.

The debate is less about whether CPI bias exists, but how big it is, whether its effect diffuses across all income strata within the economy, and its political implications. See this Megan McArdle post for the libertarian take, and this Brad DeLong post for the social democratic take.

My take is similar to Megan's, but I haven't blogged about it because it can be very difficult to articulate the extent to which technology has converted what used to be luxury goods into normal goods.

And the I opened my son's BK Kids Meal....

The toy in my son's meal was an Open Season-themed radio. Not just an ordinary radio, but one that hooked around the ear, making it look like a kids version of a cell phone earpiece. The battery is included. You can take a gander at it by clicking here and then clicking on "Toys".

Thirty years ago, when I was a child, this would have been a $20 ($68.71 in 2006 dollars) birthday gift that would have made me the coolest kid on the block. It is now an afterthought, a free, promotional gift as part of a $4.00 kids meal that is affordable to 99% of all American households.

If that seems hard to grasp, here's another way of looking at it -- I predict that by the time my son is my age, Burger King will include the equivalent of an IPod Nano in every kids meal.

Does the CPI incorporate some of the effects discussed in this parable? Certainly it does, in the form of the declining cost of radios. Does it incorporate all of them? No -- the increasing sophistication of the toys contained within kids meals is not included.

Readers are invited to submit other examples on a par with my son's kids meal as examples of how previously exotic technologies have become practically throwaway commodities.

posted by Dan at 02:12 PM | Comments (10) | Trackbacks (0)