Blogging will be light for the next 48 hours as I wend my way to Princeton for the first meeting of the International Political Economy Society.

You can take a gander at the program here. Most of the papers and presentations are downloadable. This includes my own paper, which has the sexy, sexy title of "The Viscosity of Global Governance."

Laura Rozen has a piece in the Los Angeles Times discussing the Bush administration's Plan B on Iraq (hat tip: Kevin Drum):

As sectarian violence rises in Iraq and the White House comes under increasing pressure to revamp its strategy there, a debate is emerging inside the Bush administration: Should the U.S. abandon its efforts to act as a neutral referee in the ongoing civil war and, instead, throw its lot in with the Shiites?

A U.S. tilt toward the Shiites is a risky strategy, one that could further alienate Iraq's Sunni neighbors and that could backfire by driving its Sunni population into common cause with foreign jihadists and Al Qaeda cells. But elements of the administration, including some members of the intelligence community, believe that such a tilt could lead to stability more quickly than the current policy of trying to police the ongoing sectarian conflict evenhandedly, with little success and at great cost.

This past Veterans Day weekend, according to my sources, almost the entire Bush national security team gathered for an unpublicized two-day meeting. The topic: Iraq. The purpose of the meeting was to come up with a consensus position on a new path forward. Among those attending were President Bush, Vice President Dick Cheney, Secretary of State Condoleezza Rice, national security advisor Stephen Hadley, outgoing Defense Secretary Donald H. Rumsfeld and National Intelligence Director John Negroponte.

Numerous policy options were put forward at the meeting, which revolved around a strategy paper prepared by Hadley and drawn from his recent trip to Baghdad. One was the Shiite option. Participants were asked to consider whether the U.S. could really afford to keep fighting both the Sunni insurgency and Shiite militias — or whether it should instead focus its efforts on combating the Sunni insurgency exclusively, and even help empower the Shiites against the Sunnis.

To do so would be a reversal of Washington's strategy over the last two years of trying to coax the Sunnis into the political process, an effort led by U.S. Ambassador to Iraq Zalmay Khalilzad.

The fighting can stop in a variety of ways -- by military victory or negotiated settlement. Historically speaking, military victories have been the most common and have most often led to lasting resolutions. So while a negotiated settlement may seem the most desirable end point, this resolution is frequently short-lived even with third-party support....

If [the US] supports the Kurds and Shiites -- the two peoples most abused under Hussein, most betrayed by the United States since 1990 and, as a result, the two most worthy of our support on moral grounds -- it risks alienating important regional allies: Turkey, Egypt, Saudi Arabia and Pakistan. On the other hand, doing the right thing (supporting the Shiites) also means doing the most practical thing, which is ensuring a stable peace and establishing long-term prospects for democracy and economic development. As a bonus, it is possible that U.S. support of the Shiite majority might pay diplomatic dividends as regards Iran's impending nuclearization.

If the United States supports the Sunnis, it will be in a position very close to its Vietnam experience: struggling to underwrite the survival of a militarily untenable, corrupt and formerly brutal minority regime with no hope of gaining broader legitimacy in the territory of the former Iraq.

By any reasonable definition, Iraq is in the midst of a civil war, the scale and extent of which is limited somewhat by the US military presence.

Civil wars typically last a long time, with the average duration of post-1945 civil wars being over a decade.
When they end, they usually end with decisive military victories (at least 75%).

Successful power-sharing agreements to end civil wars are rare, occurring in one in six cases, at best.

When they have occurred, stable power-sharing agreements have usually required years of fighting to reach, and combatants who were not internally factionalized....

The historical record on civil war suggests that this strategy is highly unlikely to succeed, whether the US stays in Iraq for six more months or six more years (or more). Foreign troops and advisors can enforce power-sharing and limit violence while they are present, but it appears to be extremely difficult to change local beliefs that the national government can survive on its own while the foreigners are there in force. In a context of many factions and locally strong militias, mutual fears and temptations are likely to spiral into political disintegration and escalation of militia and insurgent-based conflict if and when we leave.

Would this be an appalling strategy to follow? Of course it would. Appalling options are all that's left to us in Iraq.

More to the point: is it worse than the other options at our disposal? Or, alternatively, is it slightly less bad? I'd guess the former: There's not much question that Shiite forces are eventually going to wipe out the Sunni insurgency, but it's probably slightly better for them to do it on their own instead of doing it with our active help, something that would alienate every Sunni in the Middle East. And don't think that we might be able to keep this a secret. Even if our support for this strategy were never publicly acknowledged, there's not much question that everyone in the region would understand perfectly well what was going on.

Such is the moral calculus we're left with in Iraq. It's not a battle between good and bad, it's a battle between bad and worse.

Milton Friedman died today at the age of 94.

Here's the Cato Institute's obituary. And here's the New York Times obit. The best quote in that one comes from Ben Bernanke: "His thinking has so permeated modern macroeconomics that the worst pitfall in reading him today is to fail to appreciate the originality and even revolutionary character of his ideas."

The obit aso contains these surprising (to me) facts:

In his first economic-theory class at Chicago, he was the beneficiary of another accident — the fact that his last name began with an “F.” The class was seated alphabetically, and he was placed next to Rose Director, a master’s-degree candidate from Portland, Ore. That seating arrangement shaped his whole life, he said. He married Ms. Director six years later. And she, after becoming an important economist in her own right, helped Mr. Friedman form his ideas and maintain his intellectual rigor.

After he became something of a celebrity, Mr. Friedman said, many people became reluctant to challenge him directly. “They can’t come right out and say something stinks,” he said. “Rose can.”

During the first two years of World War II, Mr. Friedman was an economist in the Treasury Department’s division of taxation. “Rose has never forgiven me for the part I played in devising and developing withholding for the income tax,” he said. “There is no doubt that it would not have been possible to collect the amount of taxes imposed during World War II without withholding taxes at the source.

“But it is also true,” he went on, “that the existence of withholding has made it possible for taxes to be higher after the war than they otherwise could have been. So I have a good deal of sympathy for the view that, however necessary withholding may have been for wartime purposes, its existence has had some negative effects in the postwar period.”

Daniel Gross asks this question in Slate with regard to foreign purchases of American conumer companies in the U.S. His answer:

It's not that dim foreign owners are screwing up the healthy American brands they acquire. Rather, they are buying brands that are already on a downward trajectory. To foreigners, these companies may seem like iconic, big brands. IBM did invent the PC. Reebok is a pioneer in fitness. And Pier 1 is the biggest independent home furnishings chain—as of February 2006, it had more than 1,100 stores in the United States (plus 43 Pier 1 Kids stores) and $1.78 billion in annual sales. Foreign companies like these brands not because they're global icons, although Reebok and IBM have international presences, but because of their domestic cachet. It would take immense sums of money to build such brands in the United States from scratch....

But iconic American brands only tend to come up for sale when they're damaged. IBM may have invented the PC in 1981. But by 2005, its parent regarded PCs as a low-margin business, one in which it didn't want to compete with Dell and HP. Reebok was facing tough competition from much-larger companies such as Nike and Adidas in the trendy footwear and athletic-apparel business. Pier 1 has simply been unable to compete with Target, Wal-Mart, and Lowe's.

Foreign buyers tend to get a look at such brands only after legions of domestic buyers have passed. The U.S. has an extremely lively market for corporate control—publicly held companies, activist shareholders such as Carl Icahn, private equity funds such as the Blackstone Group, and hedge funds spend their days and nights seeking takeover candidates. Any time an asset with any trace of value comes on the market, it inspires a frenzy of due diligence and meetings. With their deep pockets and willingness to use leverage, these players rarely get outbid. For six months, U.S. investors have had an opportunity to check out the aisles of Pier 1. None found it worthy of purchase.

So, it's no surprise foreign buyers of iconic companies find themselves losing dollars and customers. They've generally had to overpay for a damaged brand. The short-term prospects for these deals do indeed look grim. Anybody expecting Pier 1's fortune to revive quickly is hopelessly optimistic. For Jacobsen and other foreign investors, the opportunity lies in a tactic American financiers and entrepreneurs have pioneered: turning around castoff broken-down companies that have a viable core business. But those turnarounds don't happen quickly, and sometimes they don't happen at all.

The theme du jour is the replacement of Bush 43 people with Bush 41 people. Matthew Yglesias argues that replacing Rumsfeld with Gates is essentially meaningless:

The purported dichotomy between 41 people (good!) and 43 people (bad!) is dramatically overstated.... Paul Wolfowitz was on the Bush 41 team. So was Condoleezza Rice. And, of course, so was Colin Powell. Don Rumsfeld, meanwhile, wasn't. The reality is that presidents almost always -- especially in the first terms of their administrations -- appoint reasonably diverse groups of people to national security positions. They proceed to disagree with each other. The President of the United States then decides what he wants to do. Bush 41 had some real nutters working for him who pushed some nutty ideas inside his administration. Bush 43 had some reasonably sensible people working for him who pushed some reasonably sensible ideas inside his administration. The difference wasn't in the advisors, it was in the presidents. More often than not, Bush 41 made reasonable choices while Bush 43 made bad ones.

Or, it could be a PR stunt.

As I said when debating Matt, I'm not sure which it is. I assume my readers will have fewer doubts one way or the other.

Kos is right -- if this Wall Street Journal editorial is any indication, James Webb is no conservative:

The most important--and unfortunately the least debated--issue in politics today is our society's steady drift toward a class-based system, the likes of which we have not seen since the 19th century. America's top tier has grown infinitely richer and more removed over the past 25 years. It is not unfair to say that they are literally living in a different country. Few among them send their children to public schools; fewer still send their loved ones to fight our wars. They own most of our stocks, making the stock market an unreliable indicator of the economic health of working people. The top 1% now takes in an astounding 16% of national income, up from 8% in 1980. The tax codes protect them, just as they protect corporate America, through a vast system of loopholes....

In the age of globalization and outsourcing, and with a vast underground labor pool from illegal immigration, the average American worker is seeing a different life and a troubling future. Trickle-down economics didn't happen. Despite the vaunted all-time highs of the stock market, wages and salaries are at all-time lows as a percentage of the national wealth. At the same time, medical costs have risen 73% in the last six years alone. Half of that increase comes from wage-earners' pockets rather than from insurance, and 47 million Americans have no medical insurance at all.

Manufacturing jobs are disappearing. Many earned pension programs have collapsed in the wake of corporate "reorganization." And workers' ability to negotiate their futures has been eviscerated by the twin threats of modern corporate America: If they complain too loudly, their jobs might either be outsourced overseas or given to illegal immigrants....

America's elites need to understand this reality in terms of their own self-interest. A recent survey in the Economist warned that globalization was affecting the U.S. differently than other "First World" nations, and that white-collar jobs were in as much danger as the blue-collar positions which have thus far been ravaged by outsourcing and illegal immigration. That survey then warned that "unless a solution is found to sluggish real wages and rising inequality, there is a serious risk of a protectionist backlash" in America that would take us away from what they view to be the "biggest economic stimulus in world history."

More troubling is this: If it remains unchecked, this bifurcation of opportunities and advantages along class lines has the potential to bring a period of political unrest. Up to now, most American workers have simply been worried about their job prospects. Once they understand that there are (and were) clear alternatives to the policies that have dislocated careers and altered futures, they will demand more accountability from the leaders who have failed to protect their interests. The "Wal-Marting" of cheap consumer products brought in from places like China, and the easy money from low-interest home mortgage refinancing, have softened the blows in recent years. But the balance point is tipping in both cases, away from the consumer and away from our national interest.

With this new Congress, and heading into an important presidential election in 2008, American workers have a chance to be heard in ways that have eluded them for more than a decade. Nothing is more important for the health of our society than to grant them the validity of their concerns. And our government leaders have no greater duty than to confront the growing unfairness in this age of globalization.

This country is splitting into three pieces. As a result of the internationalization of the economy, the people at the top have never had it so good. The middle class is continuing to get squeezed by stagnant wages and rising cost of living. And we are in danger of creating a permanent underclass. We must reexamine our tax and trade policies and reinstitute notions of fairness, and also enforce our existing trade laws so that free trade becomes fair trade.

a) Have little effect on the income of the richest Americans -- though their capital gains will fall dramatically;

b) Benefit some middle-class Americans in the form of preserving their import-competing jobs, while hurting other middle-class Americans by destroying their import-reliant jobs;

c) Have a mixed effect on the poorest Americans -- even if their wages rise from halting illegal immigration, their costs of living will rise even higher from the higher price of goods in the stores.

UPDATE: Arnold Kling and Greg Mankiw have more. Mankiw makes a good point here:

[L]et's suppose for a moment that a free-market economist were hired by the Dems to offer policy advice. If the boss's goal is to reduce income inequality, what is the best way to do that?

The standard Democratic fare would be quickly rejected. Erecting barriers to trade, raising the minimum wage, encouraging the cartelization of labor via unions, and bashing Wal-Mart are inefficient and poorly targeted ways to redistribute income.

The tax system is probably the best vehicle to accomplish the Dems' goal. One possibility would be to reduce the payroll tax rate and to make up the lost revenue by increasing, or perhaps even eliminating, the cap on taxable payroll. That would benefit, approximately, the bottom 90 percent of the income distribution.

This policy change would, of course, have an efficiency cost. By raising taxes on taxpayers who already face the highest tax rates, the deadweight losses of the tax system would surely rise. But almost any attempt to achieve a more equal distribution of income would entail efficiency costs. The Dems' goal should be to minimize the efficiency cost for any given amount of redistribution. And that is most likely accomplished through the tax system rather than by more heavy-handed market interventions.

This New York Times story by Robert Worth has very little good news in it:

More than 700 Islamic militants from Somalia traveled to Lebanon in July to fight alongside Hezbollah in its war against Israel, a United Nations report says. The militia in Lebanon returned the favor by providing training and — through its patrons Iran and Syria — weapons to the Islamic alliance struggling for control of Somalia, it adds.

The report, which was disclosed by Reuters on Monday, appears to be the first indication that foreign fighters assisted Hezbollah during the 34-day conflict, when Israel maintained a tight blockade on Lebanon.

The report also says Iran sought to trade arms for uranium from Somalia to further its nuclear ambitions, though it does not say whether Iran succeeded.

The 86-page report was issued by four experts monitoring violations of a 1992 United Nations arms embargo on Somalia, which was put in place after the country lapsed into civil war and remains in effect. The report is to be discussed Friday at the Security Council.

I'm probably more enthusiastic than most about the ability of multilateral economic sanctions to topple the North Korean regime. On the other hand, it looks like real multilateral enforcement ain't gonna happen anytime soon.

So.... what's left? Well, there's the engagement option, of course. Which leads me to Anna Fifield's FT journal from Kaesong, the joint ROK-DPRK industrial zone. If commercial engagement is going to change the DPRK regime from within, this should be the flashpoint.

Fifield's piece sounds optimistic, but I have my doubts:

South Korea’s sunshine policy has clearly failed to change the regime’s behaviour – Seoul has sent billions of dollars to Pyongyang over the past eight years and has received almost nothing in return. Seoul must start to demand information about where its money is going – preferably paying Kaesong workers directly – and make it clear how it expects Mr Kim’s regime to act in return for this assistance.

But decades of American containment haven’t worked any better.

So despite the obvious moral dubiousness of paying money to a regime that lets its people starve while all the while developing nuclear weapons, the positives of Kaesong still outweigh the negatives.

Indeed, there is plenty of evidence to suggest that engagement is making a difference.

The trip to Kaesong marked my seventh visit to North Korea in the last two years. Even in that short time it has become apparent to me that economic links are having an impact in this most closed and communist of societies....

The 9,500 North Koreans now working at the Kaesong complex every day see how much taller, healthier and wealthier South Koreans are. If even 10 per cent of them go home and talk about their Southern colleagues, or about the foreigners who intermittently visit this park, that will have a profound effect.

This will only be amplified if Kaesong develops according to plans. It is projected to employ 500,000 North Koreans when it is completed in 2012.

South Korea knows this. “We never talk about this but the real reason behind engagement is to show the North Koreans that their system is based on lies,” one senior government official confides. “This will destroy the ideas that sustain their system. They can’t keep out these ideas of freedom and prosperity. It’s what is invisible that is most important.”

Indeed, Hong Heung-joo, the South Korean executive director of the Kaesong Industrial District Management Committee, says he has already noticed significant attitude changes since the complex opened.

“The most important change is that North Koreans have realised the importance of production. Under the North Korean system there is no sense of profit, but here North Korean workers are working to targets and asking for extra hours. That means they are becoming aware of market economics.”

Personal contact does remain limited – the two sides eat lunch separately and conversation rarely strays outside work-related matters. Indeed, the tip sheet given to visitors by Southern authorities advises that North Koreans are “generally simple, naïve and emotional”.

Visitors should refrain from commenting on “the economic situation of either the North or the South, liberal democracy, the superiority of the market economy, unification-related matters, the North Korean leadership, education systems, human rights and/or other potentially sensitive issues,” the sheet says.

This evaluation of the blog might have to be excerpted on the sidebar:

This is a personal website, by a person call Daniel D. Rezner, where he has a section on his opinions and terrorism and its impact on the world's economy. He has some interesting comments and suggestions so you can visit his site if you are interested.

A common lament among financial market analysts in the U.S. is that the onerous provisions of Sarbanes-Oxley (SOX) are costing American equity markets lost listing oppotunities, threatening a sector that's vital to the United States. These people find unlikely allies in Nancy Pelosi and Barney Frank.

I certainly support making SOX compliance easier for new start-ups, but it should be noted that I don't see the U.S. losing its primacy in equity markets anytime soon. For those doubters out there, click over to this Foreign Policy list of candidates to supplant the New York Stock Exchange.... in a century or two. The most important sentence in the piece is the first one: "The New York Stock Exchange dominates global trading. At nearly $23 trillion, its market capitalization—the value of the stocks it lists—is more than four times that of its closest competitor."

I'm pleased to see that the Economist has entered the blogging age, with its Free Exchange blog. As per the Economist's rules for its print magazine, there is no identification of the authorship of individual posts, but I have it on good authority that Megan McArdle is using her invisible hands to guide its development.

As I am knee-deep in day-job activities, I would like to welcome Free Exchange into the blogosphere by requesting that it comment on two memes currently making their way through the blogosphere:

1) Over at Crooked Timber, Chris Bertram asks a pointed question to libertarians -- what kinds of inequality matter?

[T]he crux of Tyler [Cowen]’s argument has been that Europe’s ageing population matters because it will lead to lower growth rates and that the compounding effect of these will be that Europe’s position relative to the US (and China, and India) will decline, and that that’s a bad thing for Europeans. Whilst Tyler insists that these global relativities matter enormously, Will [Wilkinon] suggests that domestic relativities between individuals matter hardly at all. Since I think of Will and Tyler as occupying similar ideological space to one another, I find the contrast to be a striking one, and all the more so because I think that something like the exact opposite is true. That is to say, I think that domestic relativities matter quite a lot, and that global ones ought to matter a good deal less (if at all) just so long as the states concerned can ensure for all their citizens a certain threshold level of the key capabilities.

UPDATE: Drezner gets results from Free Exchange!!

2) The left half of the blogosphere is praising to the high heavens an article by Christopher Hayes from In These Times about the "neoclassical indoctrination" that allegedly takes place in introductory economics classes:

As taught by Sanderson, economics is a satisfyingly neat machine: complicated enough to warrant curiosity and discovery, but not so complicated as to bewilder ..., and once you’ve got the basics of the model down, everything seems to make sense. As the weeks go by, ... I come to love the class. The more reading I do, the more sense the op-eds in the Wall Street Journal make. The NPR program “Marketplace” becomes interesting. I even know what exactly the Fed rate is. A part of the world that was blurry and obscure begins to come into focus. My classmates seem to feel the same way. “I never thought I’d be interested in economics,” one sophomore told me. “Sanderson convinced me I was.”

The simple models have an explanatory power that is thrilling. Once you’ve grasped the aggregate supply/aggregate demand model, you understand why stimulating demand may lead, in the short run, to growth, but will also produce inflation. But the content of that understanding turns out to be a bit thin. Inflation happens because, well, that’s where the lines intersect. “A little economics can be a dangerous thing,” a friend working on her Ph.D in public policy at the U. of C. told me. “An intro econ course is necessarily going to be superficial. You deal with highly stylized models that are robbed of context, that take place in a world unmediated by norms and institutions. Much of the most interesting work in economics right now calls into question the Econ 101 assumptions of rationality, individualism, maximizing behavior, etc. But, of course, if you don’t go any further than Econ 101, you won’t know that the textbook models are not the way the world really works, and that there are tons of empirical studies out there that demonstrate this.”

The problem cited in the last graph is the exact reverse of how I remember my own Econ 101 class. In that course, we were first introduced to perfect competition, and then we were exposed to the ways in which the real world deviates from perfect competition -- monopolistic competition,oligopoly, monopoly, and, most important, the problem of externalities. We then learned that the best way to solve many of the problems of externalities was to use market mechanisms (i.e., taxes) rather than direct controls. The end result of the course was an appreciation of how technocrats can use incentives to improve social outcomes in the economy.

Fair enough. But it was not until graduate school that I saw anything resembling the public choice approach to economics, which calls into question the ability of the government to act as a Platonic Guardian in the world of regulation.

To be fair, Hayes wrote his piece after taking a macroeconomics course, where many of these issues would not have arisen. From my experience, however, after Econ 101 students probably have a greater appreciation for how markets work, but also develop a new enthusiasm for the ways in which the government can influence market outcomes.

I'd be curious whether others who took Econ 101 had my experience or Hayes' experience.

A few odds & ends from the world of international education:

1) It would appear that the U.S. has finally reversed the decline in international students wishing to study in the U.S. Karen Arenson summarizes the latest information in the New York Times:

The number of new foreign students coming to the United States grew this school year, after several years of weakness that followed the terrorist attacks of 2001, according to a survey to be released today by the Institute of International Education.

According to the survey, conducted by the institute and other education groups, the number of new international students at American colleges and universities increased 8 percent this fall over last, to 142,923.

Another sign of a turnaround was a sharp upturn in student visas, said Allan E. Goodman, president of the institute. Dr. Goodman said the State Department issued a record 591,050 student and exchange visas in the 12 months ending in September, a 14 percent increase over the previous year and 6 percent more than in the year leading up to the 2001 attacks.

More than half of the approximately 900 campuses that participated in the survey said they had seen increases in the number of foreign students this fall.

Dr. Goodman attributed the increase to the easing of visa restrictions imposed after the terrorist attacks and to greater efforts by colleges to attract foreign students.

“We’ve been worried for three years that there would be a slow and steady decline in the number of international students studying here,” Dr. Goodman said. “But it looks like the decline is ending.”

Parenthetical thought -- how does Lou Dobbs feel about this info? On the one hand, the increase in student visas means greater flows of foreigners into the United States -- which Dobbs the nativist would surely condemn. On the other hand, the increase in foreign students actually improves our balance of trade ($13.5 billion according to this estimate), since they count as an export of services -- which Dobbs the mercantilist would surely like.

2) The Boston Globe's Jehangir S. Pocha looks at Western educational institutions aggressively courting export markets establishing new satellite institutions in rising economies:

So far, more than 100 Western schools and universities have set up in China, and the number is expected to grow.

A team from Harvard University headed by William C. Kirby, director of the Fairbank Center for East Asian Research, was in China over the summer to evaluate how the university could establish a presence in China.

"It's an idea whose time has come," said Matthew Benjamin Farthing, headmaster of the newly opened Harrow International School in Beijing. "As the world is globalizing, it's only natural for education to globalize. Parents everywhere want the best education and while they once had to send their children to places like Harrow in the UK or US, schools like Harrow are now coming here."

While some of the educational institutions, including Harvard, are looking only to set up local centers where students from their home country can come to study China's dynamic economy and evolving society, others are seeking to enroll local students in degree or diploma programs.

"In our first year, we enrolled mostly expatriate children, both from Britain and countries familiar with the value of a Harrow education, but in two years I expect things will be different," Farthing said from his staid office as scores of students in Harrow's trademark ties milled around outside.

The prestige of such traditions and the reputation of schools such as Harrow are luring Chinese students and parents to international institutions....

The price tag for acquiring a education like this from one of the elite Western institutions in China is between $8,000 and $25,000 per year. Expatriates who send their children to these schools are mostly immune to sticker shock since it's mostly their employers that pick up the tab.

But even China's new upper middle-class isn't likely to be deterred by the bill.

Education is highly valued in China and despite the fact that the average American university or private school education costs more than a middle-class Chinese family can save in a generation, there are currently 63,000 Chinese students enrolled in universities in the United States, more than from any foreign country except India, which has 80,000 students in American schools, according to the New York-based Institute of International Education.

That number could be much higher but for the common practice of ensuring geographic balance in admissions, which ensures that Chinese students don't crowd out students from Europe, Latin America, and Africa.

With Chinese students facing steep challenges to study abroad, more and more of the foreign institutions creating campuses in China are hoping to woo locals by marketing their degrees as a Western-quality education in a Chinese setting -- at reduced prices. For example, a year at Harrow Beijing costs about $15,000, about half what it would cost in Britain.

3) Finally, while it's great to see U.S. universities retain their global comparative advantadge, I fear that the Canadians will soon be able to siphon away some of the greatest minds of our generation -- at least, if this Reuters report is correct (hat tip: reader S.S.):

The use of medical marijuana has given two Toronto professors the right to something that many students could only dream of -- access to specially ventilated rooms where they can indulge in peace.

The two, at the esteemed University of Toronto and at York University to the north of the city, suffer from chronic medical conditions that some doctors say can be eased by smoking marijuana. They are among nearly 1,500 Canadians who have won the right to use the drug for health reasons.

Using human rights legislation, the two petitioned their employers for the right to light up in the workplace. They faced a legal struggle, but the universities eventually agreed.

"Without the medication, I am disabled and I'm not able to carry out meaningful and valuable, productive work," said York University criminology professor Brian MacLean, who suffers from a severe form of degenerative arthritis.

First the "sexy sex sex" class, and now pot-smoking? The University of Toronto is going to clean America's educational clock.