Saturday, May 19, 2007

Hugo Chavez approaches the Mugabe level of economic mismanagement

On Thursday the Wall Street Journal's Jose De Cordoba had a front-pager describing how Hugo Chávez's agricultural reforms are going:

Now Mr. Chavez is taking his revolution to the Venezuelan countryside. "We must end latifundios," he said in a televised speech in March, referring to large agrarian estates. "The people order it, and we will do it, whatever the cost." Then he announced the seizure of a land area larger than the state of Rhode Island.

Since coming to power, The Chávez government has handed over 8.8 million acres, an area bigger than Maryland, for use by the poor. While much of this was state-owned land that was either idle or leased to ranchers, some 4.5 million acres were "recovered" from private owners, Mr. Chávez said recently. In some cases, the government compensated them. In most others... it has simply turned a blind eye to land invasions.

The government bills land reform as a way to make Venezuela self-sufficient infood. But so far, the effect has been to undercut production of beef, sugar and other foods, as productive land is handed over to city dwellers with no knowledge of farming. Established farmers and ranchers, fearing their land may be seized next, are cutting investment in their operations to a minimum.

The chaos in the countryside has contributed to shortages in basic items like milk and meat, a paradox in a country enjoying an economic boom traceable to high oil prices. Also spurring the shortages are price controls on certain foods that keep them prices below the cost of production. Meanwhile, 19%-plus inflation--as oil revenue floods the economy--spurs panic buying: purchasing price-controlled and other goods the shopper might not immediately need for fear of having higher prices in the future or not finding the items at all.

"You get up at dawn to hunt for a breast of chicken all over town. Housewives are in a foul mood." says Lucylde Gonzalez, a Caracas homemaker, who says she hasn't seen an egg in a week."

Chávez has now reached the Robert Mugabe level of economic incompetence by messing with the farm sector. Let's hope he does not move past that to the Mao Zedong/Great Leap Forward level of economic mismanagement.

posted by Dan at 09:49 AM | Comments (5) | Trackbacks (1)

Friday, May 18, 2007

May's books of the month

With the end of the semester, I can now proceed with this month's book selections.

The international relations book of the month is The Silence of the Rational Center, by Stefan Halper and Jonathan Clarke. Halper and Clarke offer up an attack against The Big Idea in foreign policy. They argue that the media marketplace tends to generate ideas that are provocative but wrong. Furthermore, the demand for 24/7 content reduces Big Ideas to empty slogans. In crisis moments, these forces overwhelm the "rational center" of experts that are capable of generating sound policy advice. Everyone comes in for attack -- cable news networks, think tanks, and academia. In many ways, this book is the bitter chaser to Jeffry Legro's Remaking the World.

Not all of Halper and Clarke's book is convincing. Indeed, in their fusillades aaginst the idea entrepreneurs, they engage in some of the simplifying, disingenuous tactics that they claim to abhor. That said, as rants go, it's an interesting rant.

The general interest book is Good Capitalism, Bad Capitalism, and the Economics of Growth and Prosperity, by William Baumol, Robert Litan, and Carl Schramm. The authors are interested in the holiest of economic holies -- the sources of innovation and growth. They are interested in determining the optimal mixture of firms, policies, and government institutions that can foster radical path-breaking innovations. Their conclusion? A mixture of small and established firms, small barriers to entry, flexible labor markets, and -- wait for it -- free trade.

Go check them out!

posted by Dan at 10:32 AM | Comments (4) | Trackbacks (0)

This whole scholar-blogger thing... in Eph form!

Cathleen McCarthy has an article in the latest Williams Alumni Review about academics who blog. I'm profiled, along with Williams political science professors Marc Lynch and Sam Crane.

posted by Dan at 08:51 AM | Comments (2) | Trackbacks (0)

Wednesday, May 16, 2007

The globalization of American sports

A theme of Michael Mandelbaum's The Meaning of Sports is that American sports don't travel well beyond our borders. Indeed, David Samuels brought up this very question in his Atlantic profile of Condoleezza Rice.

I'm increasingly wondering if this still holds up. To be sure, soccer/football remains the most popular global sport. However, the second most popular sport is basketball -- invented in the U.S.A. The globalization of baseball -- through imports like Daisuke Matsuzaka and exports like the World Baseball Classic -- is also proceeding apace.

The claim that American sports aren't followed outside of the U.S. rests primarily on American football, which is generally viewed by non-Americans as only slightly less offensive than dwarf-tossing.

Again, if this AP report is correct, I'm no longer sure if this holds:

The first regular season NFL game outside North America is shaping up as a hot ticket.

The first 40,000 tickets for the Oct. 28 game between the Miami Dolphins and New York Giants at the new Wembley Stadium sold in 90 minutes Wednesday.

"The speed in which such a large number of tickets were snapped up ... demonstrates the great excitement and appetite for the game in this country," said Alistair Kirkwood, managing director of NFL UK. "We know that the last few tickets available in this first batch will be gone very soon."

None of these sports will eclipse soccer -- but that doesn't mean that they are globally unpopular.

posted by Dan at 10:46 PM | Comments (26) | Trackbacks (1)

Who I want to blog

Henry Farrell and I were talking the other day about the good thing that economist bloggers have going. The exchanges between Dani Rodrik, Tyler Cowen, Mark Thoma, Greg Mankiw, and Brad DeLong on trade issues have been engaging and informative. These kind of interactions have been all to rare among international relations scholars.

In part, this might be because a critical mass of blogging IR scholars has yet to exist. Which got me to thinking -- who among our colleagues would I like to see in the blogosphere?

The list is not as obvious as one might think. Obviously, you would want people who have active and interesting research programs. However, you would also want people who would "get" the blogosphere, would actually enjoy the prospect of blogging, would care about policy-relevant topics, and would write in a manner accessible enough to attract the interested layman. Also, to be on the safe side, they have to be tenured.

With those criteria in mind, here is my top 10 list of international relations scholars I want to see in blogspace:

1) James Fearon. Really, this guy just sickens me. It's not enough that he gets cited by anyone and everyone, or that he's one of the few formal modelers who can explain their work to the innumerate. Now he's actually starting to write for a wider audience. He should just start a blog and shame all of us at this as well.

2) Elizabeth DeSombre. Because I have the pulse of the internets at my finger, I'm dimly aware that environmental issues might be kinda important over the next few decades. Beth always has an interesting take, she's published two books on environmental regulation, and I know for a fact that she read blogs. Go on, Beth, take the next step.

3) Michael Tierney. Mike is an occasional commenter to this blog, but he has a set of interesting research interests, ranging from World Bank governance to what other IR scholars think. In other words, he knows enough about enough topics to be well-suited to the blogosphere. Besides, he's living my dream -- he's gone back to teach at his alma mater.

4) David Victor. Hmmm.... let's check out his research interests -- energy policy, climate change, role of technology, innovation and competition in development. Too bad no one cares about those things.

5) Erik Gartzke. Erik has a citation count that would shock and awe entire departments. He's one of the best large-N security scholars in the field, and he's already had a blog run-in with R.J. Rummel. He doesn't bruise easily -- perfect for blogging.

6) Iain Johnston. China is an important country. You would think IR people would therefore know a lot about it, but you would be wrong (to be fair, this is being corrected very quickly. I have had conversations with at least a dozen colleagues planning research trips to China). Iain, on the other hand, knows a great deal about the place. He should share a little.

7) Sumit Ganguly. India is important too. Furthermore, Sumit holds the Rabindranath Tagore Chair in Indian Cultures and Civilizations, which just sounds great.

8) Amy Zegart. Not enough has been written about the organizational politics that plague foreign policy agencies. Amy, however, has written two excellent books on the topic. People should listen to her more often.

9) Hein Goemans. Hein is one of those people who has research programs exploding from his brain. I think a blog would do Hein good, allowing him to figure out which research ideas are really good and which ones just need a few blog posts. Plus, he was darn cute as a child.

10) Randy Schweller. Last fall, on 30 Rock, Alec Baldwin had a great line to describe one character: "In five years we'll either all be working for him or be dead by his hand." This is how I kind of feel about Randy's place in international relations. If Randy ever translates his seminar persona to the blogosphere, the rest of us will be as interesting as wallpaper paste.

[Besides your fruitless exhortations, how can you entice these people into the blogosphere?--ed. I hereby plead the creators of the Fantasy IR game to offer five points to senior IR scholars who start blogs.]

Readers are encouraged to offer their own suggestions.

posted by Dan at 10:47 AM | Comments (8) | Trackbacks (0)

How's the diversification thing going, Hugo?

Over at Duck of Minerva, Peter Howard explains why Hugo Chavez's plan to diversify oil exports away from the United States will not work. This bit from a linked Washington Post story was particularly interesting:

During most of Chávez's eight years in office, more than 60 percent of the country's total crude exports have gone to the United States, up from 50 percent throughout much of the 1990s, according to Ramón Espinasa, a former chief economist at PDVSA who is now a consultant in Washington. The trend is due to growing U.S. demand, Venezuela's rising consumption and what oil analysts say is the state's inability to diversify its base of clients to include big consumers.

But in an ideologically drawn battle, one marked by constant verbal slings, Chávez has promised to veer sales away from the United States.

He often says that PDVSA is considering selling Citgo, its refining and retail arm in the United States, which processes and sells the extra-heavy brand of crude mined in Venezuela. His government has also increased sales to China, with 300,000 barrels a day now headed there, Rafael Ramirez, the energy minister and PDVSA's president, said in an interview this month....

So a country less capable of producing oil, analysts say, is more tied to the United States, where refineries wholly or partly owned by PDVSA refine Venezuela's molasses-like oil. The installations exist nowhere else, which makes some analysts skeptical that Venezuela is exporting as much to China as it claims.

Here's an interesting (and purely hypothetical) question: if Chavez is so gung-ho to nationalize the energy sector in Venezuela, what would happen of the United States government chose to nationalize Citgo?

posted by Dan at 12:03 AM | Comments (9) | Trackbacks (0)

Tuesday, May 15, 2007

It's a small, small world

Skipping through the blogosphere, I came across this Mark Thoma post about a Commonwealth Fund story comparing health care across the world.

In an odd coincidence, today I shared a cab to Reagan National airport with the head of this club, and heard her repeat these points to a Bloomberg reporter. To her credit, she apologized profusely after finishing.

Mark also has a post about how economists think about globalization that is worth checking out.

posted by Dan at 11:52 PM | Comments (1) | Trackbacks (0)

The Wolfowitz Bush managerial style

The pressure is growing on Paul Wolfowitz to leave the World Bank. The Financial Times' Krishna Guha and Eoin Callan -- rapidly becoming the World Bank's internal newsletter -- lays out the situation:

Paul Wolfowitz’s handling of a secondment deal for his girlfriend Shaha Riza broke the World Bank’s code of conduct, three staff rules and the terms of his contract as bank president, the final report by a panel investigating his role has concluded.

The report asks the bank’s board to consider, in the light of its findings, “whether Mr Wolfowitz will be able to provide the leadership needed to ensure that the bank continues to operate to the fullest extent possible in achieving its mandate”.

It suggests that the board should take into account in making this judgment the “damage done to the reputation of the World Bank group and its president, the lack of confidence expressed by internal and external stakeholders in the present leadership, the erosion of operational effectiveness...and the important strategy and governance challenges the World Bank group is facing”.

also asks the board to undertake a review of the bank’s governance structures “with the aim of ensuring that it is capable of effectively dealing with the challenges raised for the institution”.

The report’s findings – released by near unanimous demand of the board – will lend enormous momentum to the European-led push for Mr Wolfowitz to resign or be forced out.

The US is expected to try to schedule a conference call of deputy finance ministers from the Group of Seven industrialised nations to address the crisis at the bank on Tuesday, after failing to set up such a call on Monday....

Robert Bennett, a lawyer for Mr Wolfowitz, declined comment on the specific findings of the report, but said that overall it was ”clear that the ad hoc committee has simply ignored the overpowering case we presented that he was acting in good faith”.

Tyler Cowen sums up the problem with Wolfowitz:
As an outsider it is hard to judge many aspects of Wolfowitz's tenure. I take his continuing unwillingness to resign to be the biggest argument against his managerial abilities. He has lost the public relations battle and can no longer be effective. Why should he want the job any more? The obvious hypothesis is that he is emotionally committed to a losing battle, and is not placing much weight on the long-term interests of the institution he is running.
Cowen's argument could be extrapolate to apply to the Bush administration as well. Consider the Justice Department. At this juncture, it appears that the White House's revealed preference is to have a loyal but incapacitated and incompetent leader of that department over making any kind of concession to Congress.

What's so amazingly boneheaded about this "double-down" strategy is that, inevitably, the White House will lose on both issues. Which means they will not only lose on these personnel questions, they will lose in a way that further exposes their unique mixture of incompetence and political weakness.

Oh, and lest one think that Wolfowitz's insistence o keeping his job is not hurting the Bank's mission, click here.

UPDATE: The Economist's Free Exchange blog provides another knock against Wolfowitz.

posted by Dan at 08:07 AM | Comments (24) | Trackbacks (0)

Sunday, May 13, 2007

Reactions to the trade deal

I still haven't seen any specifics on the trade deal between Bush and congressional Democrats. I have, however, seen a lot of criticism from across the board -- which either suggests its a really bad deal or it's the optimal outcome given the tight bargaining constraints involved.

In the Wall Street Journal, John D. McKinnon and Greg Hitt look at the usual suspects to see who's upset:

[A]s details of the agreement emerged, some labor and environmental groups pointed to what they viewed as some significant limitations.

Many businesses had worried the deal would make international labor provisions enforceable against American employers. On Friday, U.S. Chamber of Commerce President Tom Donohue said in a statement that the chamber is "encouraged by assurances that the labor provisions cannot be read to require compliance."

That doesn't sit well with AFL-CIO President John Sweeney, who said the agreement doesn't give enough " challenge U.S. laws." He also complained that in the event of violations, "there is no guarantee the executive branch will enforce any new rights workers may gain through these negotiations." He said his organization would reserve judgment on the deal for the time being.

Some environmentalists raised concerns that big potential loopholes remain for foreign investors -- particularly oil and gas companies that have made large investments in South America.

In addition to worker and environmental protections, the deal calls for quicker access to generic drugs for developing countries. Democrats had made inclusion of such a measure a priority, but brand-name drug makers had fought it.

Billy Tauzin, president of the Pharmaceutical Research and Manufacturers of America, said his group has been "extremely concerned during this process that core American intellectual-property rights remain protected." Drug makers said they will try to win back lost ground in other coming trade battles in Congress this summer.

Manufacturers, meanwhile, complained that many of the new worker and environmental protections will be hard, if not impossible, to enforce. They urged the U.S. to focus more on currency manipulation, theft of intellectual property and other unfair trade practices.

Free trade promoters? They're not too thrilled either. The Cato Institute's Center for Trade Policy Studies issued the following press release:
The deal constitutes a political victory for Democrats in Congress, who compelled the administration to swallow U.S. union demands, but is unlikely to lead to any new trade liberalization (another union wish). Forging trade policy is a balancing act: the more an agreement is limited to reflect domestic political demands, the less likely prospective trade partners are to see the benefit of agreeing. With respect to the three Latin American agreements, those countries will now have to reopen debate in their legislatures, which might reject the terms.
Maybe, maybe not. As James Surowiecki points out in The New Yorker, the U.S. can get countries to swallow an awful lot of domestic political demands:
Free trade is supposed to be a win-win situation. You sell me your televisions, I sell you my software, and we both prosper. In practice, free-trade agreements are messier than that. Since all industries crave foreign markets to expand into but fear foreign competitors encroaching on their home turf, they lobby their governments to tilt the rules in their favor. Usually, this involves manipulating tariffs and quotas. But, of late, a troubling twist in the game has become more common, as countries use free-trade agreements to rewrite the laws of their trading partners. And the country that is doing this most aggressively is the United States.

Our recent free-trade agreement with South Korea is a good example. Most of the deal is concerned with lowering tariffs, opening markets to competition, and the like, but an important chunk has nothing to do with free trade at all. Instead, it requires South Korea to rewrite its rules on intellectual property, or I.P.—the rules that deal with patents, copyright, and so on. South Korea will now have to adopt the U.S. and E.U. definition of copyright—extending it to seventy years after the death of the author. South Korea will also have to change its rules on patents, and may have to change its national-health-care policy of reimbursing patients only for certain drugs. All these changes will give current patent and copyright holders stronger protection for longer. Recent free-trade agreements with Peru and Colombia insisted on much the same terms. And CAFTA—a free-trade agreement with countries in Central America and the Caribbean—included not just longer copyright and trademark protection but also a dramatic revision in those countries’ patent policies.

The power asymmetries are such that the U.S. can muscle its domestic preferences into an FTA when it can't do the same thing in the WTO.

Is ability this a good thing? Dani Rodrik doubts it:

[T]his new direction is full of pitfalls--not just disguised protectionism as free-trade fundamentalists fear, but also an inevitable tendency to want to impose our own ways of organizing society on our trade partners. The principle of the right to organize is fine, but different democratic societies have different labor laws, all arguably equally "democratic." If we start judging the adequacy of other countries' laws from the perspective of what WE think is the right set of requirements, we will soon be in trouble.

Which is why I don't think the attempt to enlarge trade agreements to incorporate social and other considerations can go really far (unless you are really serious about it and want to create legal and political integration along with economic integration, as in the case of the EU).

I was originally opposed to these provisions, but have become more agnostic about them over time. On the one hand, there's decent evidence that the best way to eliminate labor and environmental abuses is to have countries grow more quickly, thus causing them to treat their workers and their environment better. On the other hand, there's also decent evidence that including these provisions has an actual effect on trading partners.

In a perfect world, I wouldn't clutter trade agreements with these provisions. In the world in which we live, I'll take these provisions as politically necessary -- so long as they are not so onerous that the proposed FTA partner nixes the deal.

UPDATE: My inside-the-beltway source on trade policy e-mailed me the following reaction:

The typical reactions around town last week... were highly skeptical about applicability, implementation, reaction of countries with recently "closed" FTAs, reaction of countries with ratified FTAs who now want might better deal (specifically with regard to pharmaceuticals), and about the methods by which the new dispute settlement mechanisms for labor and environment might actually work. You could probably sum the reaction of many trade pros as follows: "they're making it up as they go along."

posted by Dan at 11:01 PM | Comments (1) | Trackbacks (0)