Friday, April 27, 2007

The greatest threat this blog has ever faced

I see that Dani Rodrik has now set up his own blog.

Great. Just great. Back in the day, I use to have the monopoly on blogging about the global political economy. Now Rodrik -- and his fancy-pants Albert Hirschman Prize -- comes along to make the competition more difficult. It's not enough that the man is responsible for Jaghdish Bhagwati's jeremiad against yours truly.

In all seriousness, Rodrik is a smart economist who can speak to non-economists -- so it's a very good thing that he's joined the blogosphere. And while we have some overlap in interest, his take is quite different from mine. So, in fact, everyone wins!

For example, I have to take issue with the central argument of this Rodrik post:

Imagine some change in the economy leaves Tom $3 richer and Jerry $2 poorer, and I ask you whether you approve of this change. Few economists, regardless of their political and philosophical orientation, would be able to give a straight answer without asking for more information.... In other words, most of us would care about the manner in which the distributional change occurred--i.e., about procedural fairness....

Yet when we teach comparative advantage and explain the gains from trade, we typically overlook this important conclusion. We expect our students to focus on the net gain triangles and disregard the rectangles of redistribution. In particular, we do not ask whether the trade opportunity involves an exchange that most people would consider unacceptable if it took place at home. So it is immaterial to our story if the gains from trade are created, say, by a company shutting down its factory at home and setting up a new one abroad using child labor. (By the way, I chose $3 and $2 in my example as these values are commensurate with the relative magnitudes that come out of trade models under reasonable elasticities.)

The thought experiment clarifies, I think, why the archetypal man on the street reacts differently to trade-induced changes in distribution than to technology-induced changes (i.e., to technological progress). Both increase the size of the economic pie, while often causing large income transfers. But a redistribution that takes place because home firms are undercut by competitors who employ deplorable labor practices, use production methods that are harmful to the environment, or enjoy government support is procedurally different than one that takes place because an innovator has come up with a better product through hard work or ingenuity. Trade and technological progress can have very different implications for procedural fairness. This is a point that most people instinctively grasp, but economists often miss.

I don't disagree with Rodrik's political argument here per se -- but I do have a few quibbles about it's generalizability:
1) Let's change the redistribution to the following:
a) Tom is 30 cents richer;
b) Jerry is two dollars poorer;
c) 135 people are two cents richer.
That's actually a more accurate picture of trade's effects. In focusing striictly on the employment effects, however, Rodrik elides the biggest gain from trade -- lower prices. He's correct that this is weak beer politically, but it's still worth remembering.

2) If the redistribution takes place because of regulatory races to the bottom like Rodrik claims, then he's got a point. What if, however, the redistribution takes place because of honest-to-God wage differentials? There will still be political objections even if Rodrik's provedural fainess critreria are met. How often does Rodrik's story happen as opposed to a standard wage story? As I've said before [Yes, several times--ed.], races to the bottom are pretty rare [UPDATE: for a counterargument that supports Rodrik, check out this Steven Pearlstein column in the Washington Post.]

3) Finally, it's worth pointing out that national identities matter more that questions of procedural fairness. When the the U.S. textile industry moves from the Northeast to the South to take advantage of cost differentials, there is less complaint than when the industry moves from South Carolina to China.

I suspect Rodrik's procedural concerns affect how attitudes about trade. But the simple act of redistribution across borders -- regardless of the reasons -- matters even more.

posted by Dan at 09:13 AM | Comments (10) | Trackbacks (0)

Debatable debate headlines

I'm sure my readers will be shocked -- shocked!! -- that I did not watch any of the presidential debate last night.

However, from today's headlines, I have a clear sense of what happened:

"Hillary Clinton shines in Democratic candidates' debate," The Guardian

"No Breakout Candidate at Democratic Debate," ABC News

posted by Dan at 07:33 AM | Comments (1) | Trackbacks (0)

Thursday, April 26, 2007

In honor of David Halberstam...

Despite baseball's long literary tradition, reading about the sport never interested me... until I read David Halberstam's Summer of 49. Despite Halberstam's admitted pro-Yankee sympathies, the book was a gripping read.

In honor of his passing -- and his unique ability to move from engaging books about serious geopolitics to serious books about engaging sports -- this blog post will discuss both baseball and geopolitics.

First, the New York Times' Michael Shmidt reports that Major League Baseball might take the lead in normalizing relations with Cuba:

Fidel Castro, 80, has experienced serious health problems in recent years, and his brother Raúl is Cuba’s interim president, a situation that has prompted speculation about the country’s future. Baseball officials began discussions a year and a half ago about how to approach the possibility of normalizing relations with Cuba.

Baseball is contemplating a strategy for teams to sign Cuban players in an effort to create an orderly system for acquiring talent from the island, according to three baseball officials and a scholar who was briefed on the plans.

“There may not be any significant changes with our relationship with Cuba in the near term, but that doesn’t mean we shouldn’t think about these things,” Joe Garagiola Jr., the senior vice president for baseball operations, said in a telephone interview. “We are thinking about them, and that is probably the extent of what we can say at this point.”

Garagiola, a former general manager of the Arizona Diamondbacks, is coordinating baseball’s discussions on Cuba.

Baseball is also considering moving a minor league team to Cuba and building training academies similar to those that nearly all teams have in the Dominican Republic, according to a report earlier this month by Fortune magazine.

Major League Baseball has stepped up its efforts to expand internationally in the past year. In March 2005, baseball and the players union organized the first World Baseball Classic, a 16-team international tournament designed to broaden interest in the sport. Baseball began expansion initiatives in Asia and Africa this past off-season.

If you ask me, MLB should be even more aggressive in establishing cooperative baseball relations with Cuba. If ping-pong can thaw Sino-American relations, why not baseball for Cuba?

Meanwhile, it appears that the import of Daisuke Matsuzaka has increased demand for advertising for a lot of major league teams. The Boston Globe's Keith Reed explains:

If you watched the Red Sox play the Texas Rangers earlier this month and couldn't read the Japanese-language ads behind home plate, don't worry. Those were meant for fans watching overseas, not you.

The Rangers are among several Major League Baseball teams capitalizing on the Sox's $103 million investment in Japanese pitcher Daisuke Matsuzaka by selling ballpark advertising to Japanese companies. Those firms, which include a chain of men's day spas, are trying to get their message across to fans watching broadcasts of Major League Baseball games back in Japan. The Rangers and Kansas City Royals have already sold ad space worth hundreds of thousands of dollars inside their own stadiums, though neither team has a Japanese baseball star. Several other teams have also gotten inquiries from Japanese firms about advertising when the Red Sox are playing.

"Teams like the Kansas City Royals are benefiting from the Red Sox," said Sam Kennedy , Sox vice president of sales and marketing.

The Sox, though, won't see much new revenue from Japanese sponsors at Fenway Park because most of the advertising space was sold long ago to American companies. It's also far more expensive to advertise at Fenway compared to other baseball venues.

Kennedy said the Sox have talked with an advertising agency in Japan that represented several companies with ads at other American stadiums, "but they weren't willing to pay our rates to be here."

(hat tip to David Pinto for the link).

Finally, check out Baseball Prospectus' Jim Baker on why, in almost every way possible, baseball today is better than when you were a kid. It's pretty convincing.

posted by Dan at 12:42 PM | Comments (5) | Trackbacks (0)

An Iran deal?

Time's Tony Karon reports that significant progress was made in the latest round of EU-Iran negotiations. In the process, Karon does an excellent job of describing how Iran's domestic politics affects their negotiating posture:

One problem in reading Iran's intentions is that it's very easy to forget who's in charge in Tehran. The fact that Mahmoud Ahmadinejad is the President doesn't mean that he is, in Bush parlance, "the decider." In fact, Iran's president has little executive authority over national security decisions (including the nuclear program), and his constitutional position makes him, if anything, probably less influential over those decisions than more pragmatic figures such as Larijani, who convenes the key foreign policy decision-making body, the National Security Council. In the end, though, there is a "decider" — the supreme spiritual leader, Ayatollah Ali Khamenei. But Khamenei wields his authority carefully, and in a consultative manner, seeking to maintain the unity of the competing factions of Iran's political class. So, while he is said to pay greater heed to the counsel of more pragmatic advisers such as Larijani and former President Hashemi Rafsanjani, the Supreme Leader is careful to accommodate the popularly elected President Ahmadinejad. For example, while the recent compromise with Britain over the 15 Naval personnel captured at sea may have been brokered in substantial part in talks between Larijani and key British officials, it was Ahmadinejad who got to do the populist grandstanding in the ceremony accompanying their release.

Ahmadinejad recently made another media splash with an announcement that Iran planned to install 3,000 centrifuges at its research facility in Natanz — he claimed this meant it was now capable of "industrial" production of reactor fuel, which was a substantial exaggeration. Iran has installed less than half the number of centrifuges announced by Ahmadinejad, and those are experiencing far more technical difficulties than the president let on; furthermore, Iran would need 54,000 centrifuges running a lot more efficiently than those currently in place to be able to produce industrial-grade enriched uranium. Current estimates from a number of different quarters say Iran is somewhere between four and ten years away from having the capacity to produce nuclear-weapons materiel....

Ahmadinejad needs to talk up the achievements of the nuclear program precisely because he has been unable to keep his chicken-in-every-pot election campaign promises. His posturing may have little to do with Iran's real intentions in the nuclear standoff with the West and much more to do with setting up a popularly acceptable compromise. Claiming, as Ahmadinejad did, that the fuel cycle had been mastered and Iran was now a "nuclear nation" could help persuade a domestic audience that Iran is not backing down on the "rights" it has so forcefully proclaimed if Tehran agrees to suspend its enrichment activities.

If a deal would require Iran to find some way to turn off its centrifuges, the Western powers would have to make some concessions, too. The U.S. had originally insisted that Iran could not be allowed to keep any enrichment facilities on its own soil, but it is now being reported that Solana may offer a deal in which Iran would keep its current small-scale enrichment research facility, although not actually run it, for now. Reports suggest that the U.S. will push for the Natanz facility to revert to "cold standby," i.e. turning off but not dismantling the centrifuges, whereas Iran would counter that they be kept spinning, although empty of uranium.

The very fact that the negotiations are focused on such details of a mutually acceptable formula for defining what is meant by "suspension" of Iran's activities suggests that the current trend in the nuclear talks is towards compromise, rather than confrontation.

If this analysis is correct, then one has to expect Ahmadinejad to try and delay agreement for as long as humanly possible. The fact is, once the nuclear issue is settled, he will be hard-pressed to achieve any of his populist goals.

UPDATE: In the Financial Times, Najmeh Bozorgmehr decribes Ahmadinejad's five-day trip through the province of Fars. It presets a mixed picture of the president -- though Bozorgmehr concludes:

I can’t help but ponder the recent analyses in political and intellectual circles in Tehran, most of which has argued that Mr Ahmadi-Nejad is finished politically. After the five-day tour, this seems like wishful thinking. His rivals have a tough challenge ahead.
ANOTHER UPDATE: Dennis Ross, on the other hand, argues over at TNR Online that Ahmadinejad and the Revolutionary Guards are waning in power.

posted by Dan at 02:41 AM | Comments (2) | Trackbacks (0)

Wednesday, April 25, 2007

The Jonathan Rauch interview

Let me join Andrew Sullivan and Virginia Postrel in linking to this Reason interview with National Jounal columnist Jonathan Rauch. Uneknownst to him, Rauch is partly responsible for the creation of this blog.

Two parts of the interview that stand out. The first reflects Rauch's spot-on take on government:

[R]ight-sizing government, if you mean imposing some preconceived size that you or I or someone else might have, is impossible. Impossible, probably inconceivable and simply not going to happen ever.

When you get right down to it, there doesn't seem to be really much of a constituency in this country for reducing the size of government in painful or unpleasant ways. Even Barry Goldwater, when he ran for president, announced that he wouldn't cut any farm subsidies, for example.

Government is an enormous ecosystem. It is, in its way, as decentralized and unmanageable as the ecosystem out there in nature. You can change the input and you'll get some change in the output, but if I've learned one thing in 25 years in Washington, it's that there far too many interests and actors for any politician to do more than work the margins. But working the margins is very, very important.

In fact, it can be the difference between having a static and enfeebling government--like the government of Japan was until comparatively recently, until the Koizumi period--and a government that gets out of the way enough so that you have room for new technology, new ideas, and some reform.

The second reflects Rauch's wariness of blog triumphalism:
I'm not a fan of the idea that the journalist and the journalist's attitude should be front and center. I think that a good journalist's duty is to get out of the way. The hardest thing about journalism--the hardest thing, a much higher art than being clever--is just to get out of the way, to show the leader of the world as the reader would see it if the reader were there. Just to be eyes and ears. Calvin Trillin, another writer I greatly admired who steered me towards journalism, once said that getting himself out of his stories was like taking off a very tight shirt in a very small phone booth. He's right.

I think Maureen Dowd is very good at what she does. But the problem is that lots of people who aren't any good at it think this is journalism. It's what we should all be doing, showing off our attitude. I think that sets a bad example. The blogosphere tends to further the [notion] that journalism is about opinion and not about fact. I think that's wrong.

Most people think they know truth and think that what they know is right. They're usually wrong. Journalists are among the few people in society who are actually paid to try go out and learn things. Checking is the core of what we do. David Broder once said that the old slogan in journalism is, "If your mother says she loves you, check it."

Read the whole thing.

posted by Dan at 03:20 PM | Comments (4) | Trackbacks (0)

Tuesday, April 24, 2007

Ta-ta and au revoir

I'm off to Europe for an intensive week-long series of meetings to think about the transatlantic relationship. Blogging will hereby be intermittent for a few days.

Talk amongs yourselves. Topics:

1) Barack Obama gave a foreign policy speech. What do you think of it?

2) Daryl Press and Eugene Gholz argue in this Cato briefing that concerns about peak oil, resource-grabbing by China, and poltical instability affecting U.S. energy imports are overblown. Compare and contrast with Thomas F. Homer-Dixon's essay about environment-inducing wars in the New York Times. Can both visions of the future be correct?

3) Books that you're reading. I'm taking with me the proofs version of Brink Lindsey's Age of Abundance and John Lukacs' George Kennan.

posted by Dan at 02:26 PM | Comments (5) | Trackbacks (0)

Monday, April 23, 2007

The politics of global warming, continued

Following up on my last post about global warming, I see there was a bit of a kerfuffle at the White House Correspondents Dinner. Sheryl Crow and Laurie David explain over at The Huffington Post:

The "highlight" of the evening had to be when we were introduced to Karl Rove. How excited were we to have our first opportunity ever to talk directly to the Bush Administration about global warming.

We asked Mr. Rove if he would consider taking a fresh look at the science of global warming. Much to our dismay, he immediately got combative. And it went downhill from there....

We felt compelled to remind him that the research is done and the results are in ( Mr. Rove exploded with even more venom. Like a spoiled child throwing a tantrum, Mr. Rove launched into a series of illogical arguments regarding China not doing enough thus neither should we. (Since when do we follow China's lead?)...

In his attempt to dismiss us, Mr. Rove turned to head toward his table, but as soon as he did so, Sheryl reached out to touch his arm. Karl swung around and spat, "Don't touch me." How hardened and removed from reality must a person be to refuse to be touched by Sheryl Crow? Unphased, Sheryl abruptly responded, "You can't speak to us like that, you work for us." Karl then quipped, "I don't work for you, I work for the American people." To which Sheryl promptly reminded him, "We are the American people."

The New York Times story by Jim Rutenberg on the encounter discusses the fallout:
Recriminations between the celebrities and the White House carried over into Sunday, with Ms. Crow and Ms. David calling Mr. Rove “a spoiled child throwing a tantrum” and the White House criticizing their “Hollywood histrionics.”

I honestly thought that I was going to change his mind, like, right there and then,” Ms. David said Sunday, The Associated Press reported....

In their Web posting, Ms. Crow and Ms. David described Mr. Rove as responding with “anger flaring,” and as having “exploded with even more venom” as the argument continued.

“She came over to insult me,” Mr. Rove said Saturday night, “and she succeeded.”

Lots of blog reaction -- Joe Gandelman, Colin McEnroe, Ann Alhouse, and, well, lots of other places.

A few thoughts:

1) Laurie David is 100% correct on one thing -- no one should ever say "don't touch me" to Sheryl Crow. I mean, really, that's just wrong.

2) It also appears that Laurie David subscribes to the Jeffrey Sachs theory of politics: there are no genuine political or policy disagreements, just a nice long talk can convince anyone to change their position. This is not to absolve Rove or the Bush administration of their rejection of global warming. It's merely to point out that there is a political logic to their policies. Which leads us to ....

3) This is not a case of "why can't everyone just get along?" Yes, there are significant benefits that can be attained through multilateral cooperation to combat global warming. There are also very significant distributional consequences as well, however. Those distributional consequences will not be resolved anytime soon, will be subject to fierce bargaining, and will likely result in policies that seem unfair to a great many people.

4) Everyone should breathe a sigh of relief that righteous indignation is not a flammable gas... just think of the potential carnage that would have ensued.

Maybe I'm wrong. Maybe people like David and Crow will actually generate a Kumbaya-moment in world politics. But I'm very, very dubious about it.

posted by Dan at 09:29 AM | Comments (25) | Trackbacks (0)