250-year consensus on the benefits of trade

Donald Luskin today in National Review Online highlights the long consensus on the benefits of trade. All economists know the data make the case overwhelming - everyone can benefit from trade. Today’s best-selling college economics textbook, Macroeconomics by Harvard’s N. Gregory Mankiw, enshrines among the “ten principles of economics” the axiom that “Trade Can Make Everyone Better Off.” But now there are bold economists questioning the case. They just happen to be working for Democrat politicians who are "concerned" about American jobs being lost. While we have 4.5% unemployment, notice? Luskin has fun contrasting how the deniers of the benefits of trade are treated compared to anyone who questions the discovery 10 years ago of global warming caused by humans. But it's not fun at all.

Would Clinton and Obama have been “electrified” if Blinder had estimated that global warming will go away over the next decade or two? It’s doubtful.

A case in point: Last October, liberal senators Jay Rockefeller and Olympia Snowe sent a letter to the CEO of Exxon Mobil urging him — one might say bullying him — to cut off his company’s funding of a “small cadre of global climate change skeptics,” to cease its “dangerous support of the ‘deniers.’” But when it comes to free trade, the liberals now in control of Congress are only too happy to support the deniers, whether or not they have Alan Blinder’s credentials. The hypocrisy is undeniable. To wit, when best-selling author Michael Crichton — who, as a trained doctor, at least has a background in science — questioned global warming while testifying before a Republican-chaired Senate committee, leftist bloggers dismissed him as an “egomaniacal ‘novelist.’”

Good work, Luskin.

Europe is working less and less

Again, back to what doesn't work. Europe coasted while the United States defended it from the Soviet threat. Now they aren't quite coasting, but they are slacking. Some claim that Europeans work less than Americans and Asians because they appreciate the finer things of life more. But economists Alberto Alesina of Harvard and Francesco Giavazzi, visiting at MIT, do the research and find that they work less because regulations make it hard to work. (Note their European names.)

European idleness is the predictable result of stultifying labor market regulations, high taxation, and the excessive power of Europe's labor unions. In France, Germany, and Italy especially, shortened work hours are now coupled with diminished productivity and lack of technological innovation. In 1970, the authors note, Italy's gross domestic product per capita was 68% of America's; by 1990, it had reached 80%. Today it is back down to 64%. At current rates of relative decline, Italian GDP per capita will in 25 years time be one third that of America.

Yes, lower productivity. And while Europe is slowing others are gaining.

China and India each have populations orders of magnitude greater than France, Britain, and Germany combined, and their citizens are willing to work more than 35 hours a week. It is inevitable that their leaders should ask why France and Britain have permanent seats at the U.N. Security Council when they do not.

And it is hard to ignore the laws of economics:

European governments, Messrs. Alesina and Giavazzi advise, should welcome the natural death of inefficient corporations and their replacement by more vigorous newcomers. Instead, they bathe struggling firms in subsidies. During the 1980s, when American corporations were reeling from the shock of massive restructuring, European ones were protected from competition, insulated from the discipline of the market. Case in point: For 50 years, the Italian government subsidized Fiat's research and development. The Italian car company used the money to enter protected industries such as insurance and energy. Meanwhile, Japanese and Korean manufacturers were learning how to make better cars. By the time Fiat's managers noticed, bankruptcy was at hand.

Alessina and Giavazzi have a new book "The Future of Europe: Reform or Decline."

Helping Developing Nations Learn the Rules

Thoman PM Barnett is a strategic thinker with a strategic theory - that the world is safer when countries trade and communicate with each other ; danger comes from isolation. He classifies the countries of the world in two groups: the integrating Core and the Gap. We are safer for each country that moves from the Gap to the Core. He make his case clearly in his book "The Pentagon's New Map." How about progress? He likes what President Bush has done with the Millenium Challenge Corporation (and he is no Bush cheerleader). Millenium Challenge makes grants to developing countries, but they are conditional. And the conditions communicate the rules for being involved in the developed world. It is good to communicate the rules, because it makes them clear; when they are understood each country can have a discussion about whether there is sufficient value for them to change how they operate to receive the MCC grant.

In 2005, on his first day as head of President Bush’s signature foreign-aid program, John Danilovich’s to-do list included the unpleasant task of telling Yemen’s president that his reform efforts had slipped so badly that the country was being cut off. Last month, Mr. Danilovich phoned Yemeni President Ali Abdallah Saleh with better news: Yemen was back on the list of countries eligible for grants from the Millennium Challenge program. What happened during those 15 months is evidence of the potential ripple effects of the high-profile aid program--and the power of the threat to publicly shame countries that veer off the path of economic and political overhaul. In short, it’s all about being credentialed by the biggest aid donor (size, not per GDP) in the world. My favorite example to date: Lesotho previously treated women the same as kids in terms of legal rights, unable to buy land or borrow money. We told them no good if you want MCC credentials: With the Millennium Challenge Corp. pressing for changes, the Lesotho Parliament passed a law in November putting married women on equal legal footing with their husbands.

Anonymous Mail - Prosecutor McKay fired for nonperformance

I must have had a letter published in the local Seattle Times. I received an anonymous post card, mailed from Everett, Washington 982--. If the writer had anything serious to say he would have put his signature with his 24-cent stamp. I found it on Sunday March 18, 2007:

The case in chief Exhibit A, McKay: Proof of negligence from 2004 investigation [their headline]

U.S. Attorney John McKay of the Seattle office should have been fired for nonperformance ["McKay 'stunned' by report on Bush," News, March 13]. In the 2004 election, unregistered people voted, people voted twice, dead people voted, people were registered to vote where they don't live. There was evidence of all of this. Did McKay investigate? No, he didn't. Why? Because there wasn't enough evidence? How did he know if he didn't investigate? McKay should have been fired earlier, so a new prosecutor could look into the known cases of voter fraud. Our elections are too important to allow illegal votes. — Ron Hebron, Lake Forest Park

Normally they call or email to confirm before publishing. But they know me well enough to skip that step; I have had letters published every year for about 15 years - one to four per year. One time they published two of my letters in the same week!

End of Slavery

Ghana remembered the 200th anniversary of the end of the slave trade this week. Slavery has been around the world since the beginning of man. But only one culture has voluntarily ended it. The English-speaking world, Great Britain first, then the US, of its own volition outlawed first trade in slaves, then all slavery in 1833 in GB, 1865 in the US. On the other hand slavery is still practiced in Muslim countries. See the story of Mende Nazer. And see Slavery in Sudan at Wikipedia. Swiss Info on Ghana:

ELMINA, Ghana (Reuters) - Two hundred years after Britain's abolition of the slave trade, Africans marked the anniversary on Sunday with a sombre ceremony recalling the suffering of their ancestors and the lasting scars of slavery. Descendants of slaves and dignitaries gathered at a white-washed former slave fort at Elmina in Ghana to remember the more than 10 million Africans -- some estimates say up to 60 million -- sent on slave ships to the New World. "Through this dark era of human history, the mystery of it all ... was the indomitable human spirit that could not be broken," said Ghana's President John Kufuor, his voice echoing around the castle courtyard. "Man should never descend to such low depths of inhumanity to man as the slave trade ever again."

The Thai government isn’t occupying Palestine

Why are Islamists murdering people in south Thailand every week? The Thai government isn’t occupying Palestine or invading Iraq or placing bases in Saudi Arabia. Why pick on Thailand? Islamists have been continuously attacking South Thailand near Malaysia for several years. Every week there is an attack on school teachers, policemen, or a tire factory. The Australian

TWO weeks ago, gunmen stopped a small passenger van in the street. They forced all of its occupants out and on to the roadside. The gunmen then shot all nine of them dead. Three of the passengers were women, one was a young girl. Just another day of Baghdad carnage, you say. But no, this was Thailand, traditionally a peaceful, prosperous and stable Southeast Asian state at the heart of the Association of Southeast Asian Nations, a formal treaty ally of the US and a close trade and diplomatic partner of Australia.

Mark Steyn first jokes that it helps fill the ecumenical nature of the jihad: Muslims vs Jews in the West Bank, Muslims vs Christians in Nigeria, Muslims vs Hindus in Kashmir, Muslims vs Buddhists in Thailand. And let's add Muslims vs Muslims in Algeria and elsewhere. But They don't demand anything.

The insurgency is all the more difficult to combat because it does not show its face. Unlike similar movements around the world, this one has not set out its demands or published a manifesto. It is a collection of violent groups without an identifiable central leadership.

He observes that by targeting the low-level civil servants, teachers, police offices, that it shows that they cannot protect you and that if you associate with them you will be at risk. What do they want? Mark Steyn:

... these “collections of violent groups” are in favor of a no-state solution. ... The Buddhist villages in the south are emptying out, week by week, remorselessly. [And that's what they want.] If you can hollow out a state from within, the husk provides useful cover for all kinds of activities, as we should have learned from Afghanistan. In fact, these non-state actors practice a more effective multilateralism than most great powers. There’s a kind of United Non-Nations Insecurity Council out there that seems all but impervious to disruption.

It's very dangerous. Scaring the people out of an area so illegal activity can reign. Update Gates of Vienna covers the situation in Thailand. "Islam intends to consume Thailand"

Monopoly and Competition in Mexico

Carlos Slim is proud to be the third richest person in the world. Mexico should be ashamed of him. He bought the national telecomm company from the government in a sale conditional on there being competition. But he fought every change and succeeded in maintaining the monopoly. He has recently been in the news looking down on Bill Gates and Warren Buffett for donating huge amounts to charity; he is so smart that he will keep all of his gains for himself. (Mexican Billionaire Carlos Slim Slams Bill Gates & Warren Buffet’s “Santa Clause” Routine) But there is good news in the retail and airline markets in Mexico. From the Wall Street Journal (requires paid subscription):

For decades Mexicans had only two choices for domestic air travel, AeroMéxico and Mexicana Airlines. Both companies, once state-owned, were privatized in the 1990s, failed and were reabsorbed by the government. Mexicana has been privatized again. Privatization did nothing to bring down sky-high airfares. Flying from Mexico City to Tijuana ran about $250, far above what most Mexicans could afford. Taking the bus costs about $80 and in 2005 bus companies carried some 250,000 passengers on the 33-hour trip.

So some businessmen took the risk of starting a low-fare airline, Volaris.

Competition drives innovation and Volaris proves the rule. The company came up with a number of creative solutions to problems that probably would not even been considered in a protected market. Mr. Kriete told me by telephone from San Salvador that the economies of scale come from the decision to purchase identical planes. Volaris saves money because its mechanics and pilots are qualified to handle all planes and sourcing parts is uniform. Mr. Aspe expanded on that point when I interviewed him in Mexico City two weeks ago, stressing the advantages of the brand-new Airbus A-319 fleet, which is more reliable and more fuel efficient than the industry average. The company also gains competitiveness, he said, with labor contracts that tie 50% of compensation to productivity. Another cost saver is the Toluca hub. Passengers traveling from Mexico City check in at what Mr. Aspe calls "the virtual terminal" in the northern suburb of Santa Fe and then travel 35 miles by bus, courtesy of Volaris, to Toluca's lower cost airport. Overhead costs are held down because 65% of reservations are made over the Internet and 20% are made through call centers.

It's still small but growing.

The beauty of Volaris is the beauty of the market. Both the airline and its customers are happy and business is booming. Last year Volaris carried more than 922,000 passengers on almost 8,700 flights at less than half the price that the traditional carriers were charging prior to competition. Bus passengers bound for Tijuana from Mexico City who switched to Volaris paid $100 and shaved 30 hours off their travel time. A number of other low-cost carriers such as Avolar, Interjet and Alma have also entered the field. According to airport operator OMA, domestic air travel was up 22% at its 13 airports last year thanks to the low-cost carrier business.

Danger to property in Washington

Back to freedom. Property owners in the US were shocked two years ago when in the "Kelo" case the US Supreme Court rule that a city can take the homes of people when its not for public use. It had long been understood that eminent domain was for public use only. But the Supreme Court ruled that the city can take property for the purpose of selling to another private owner. In Washington we have been told that our state constitution is stronger and allows us more protection than the US's. But people who have studied it say "Wrong," we are at danger. The Washington Policy Institute has done a study and got a bill introduced in the Legislature to correct, or at least improve, the problems. Three big ones: • The government may seize more proper than it needs so long as there is some aspect of public use involved somewhere in the project. This allows a local government to become a real estate speculator with any portion of condemned property not devoted to public use. • State and local officials may also use their eminent domain powers to deliberately target properties that are not upscale enough for their liking, even when these properties are not necessary to achieve a public use. • What’s more, condemnation determinations can take place at secret meetings where the sole notice to the property owner consists of a posting on an obscure government website. Read the report at Washington Policy Center.

12.9 feet of rain in 3 days

While in Thailand we did a day-trip to an elephant farm with a couple from the La Réunion - a remote island off Madagascar in the Indian Ocean. I saw that a category 4 typhoon - same as a hurricane - was a few hundred miles away, so I wrote and asked him about its effect. A previous storm, Gamede, passed by just close enough that they were in its high winds for 3 days. Gamede cut the island into three. One bridge that's out will take over a year to replace. And Gamede caused rainfall that broke the world record for rain in a 72-hour period = 12.9 feet, 3.93 meters!! Can you imagine that? The record was high on a mountain, but a village at 3,000 feet also got more rain than the previous record. I read about this at Weather Underground - Jeff Master's weather blog.

Global warming Arctic trek cancelled due to frostbite

Two women started on a 530-mile trek from Canada to the North Pole to bring attention to global warming. They cancelled after traveling 18 miles due to tempertures of -103F and frostbite. They had special suits for swimming across the breaks in the ice due to warming. Their explanation: Global warming can cause "extreme unpredictable changes in temperature." Yes, minus 103F. This is not ScappleFace. That is the news story from the Minneapolis Star-Tribune:

Then it got colder at night than even they had anticipated, possibly as low as -103 degrees outside their tent and -58 inside. In cold like that, they couldn't do much to warm up Arnesen's battered toes. "We've had a tough time, because of the cold, because of our gear," Bancroft said in an audio message posted Saturday on the Internet. "And so we're struggling." Monday, expedition coordinators announced that the two explorers had determined it was too dangerous to keep going.

And ...

The two had traveled about 18 miles by the time they had returned to Ward Hunt Island.

They didn't swim any. Tip: American Thinker

Scientists call Al Gore on his facts

“Nowhere does Mr. Gore tell his audience that all of the phenomena that he describes fall within the natural range of environmental change on our planet,” Robert M. Carter, a marine geologist at James Cook University in Australia, said in a September blog. “Nor does he present any evidence that climate during the 20th century departed discernibly from its historical pattern of constant change.” Even scientists who support Albert Gore, Jr's call to control greenhouse gases to slow global warming are cool to his sales job. He stretches the facts too far for these supporters. William Broad reports in the New York Times:

“I don’t want to pick on Al Gore,” Don J. Easterbrook, an emeritus professor of geology at Western Washington University, told hundreds of experts at the annual meeting of the Geological Society of America. “But there are a lot of inaccuracies in the statements we are seeing, and we have to temper that with real data.” ... Criticisms of Mr. Gore have come not only from conservative groups and prominent skeptics of catastrophic warming, but also from rank-and-file scientists like Dr. Easterbook, who told his peers that he had no political ax to grind. A few see natural variation as more central to global warming than heat-trapping gases. Many appear to occupy a middle ground in the climate debate, seeing human activity as a serious threat but challenging what they call the extremism of both skeptics and zealots. Kevin Vranes, a climatologist at the Center for Science and Technology Policy Research at the University of Colorado, said he sensed a growing backlash against exaggeration. While praising Mr. Gore for “getting the message out,” Dr. Vranes questioned whether his presentations were “overselling our certainty about knowing the future.”

Gore's defense: these are just nuances.

James E. Hansen, an environmental scientist, director of NASA’s Goddard Institute for Space Studies and a top adviser to Mr. Gore, said, “Al does an exceptionally good job of seeing the forest for the trees,” adding that Mr. Gore often did so “better than scientists.” Still, Dr. Hansen said, the former vice president’s work may hold “imperfections” and “technical flaws.” He pointed to hurricanes, an icon for Mr. Gore, who highlights the devastation of Hurricane Katrina and cites research suggesting that global warming will cause both storm frequency and deadliness to rise. Yet this past Atlantic season produced fewer hurricanes than forecasters predicted (five versus nine), and none that hit the United States. “We need to be more careful in describing the hurricane story than he is."

And ...

Some of Mr. Gore’s centrist detractors point to a report last month by the Intergovernmental Panel on Climate Change, a United Nations body that studies global warming. The panel went further than ever before in saying that humans were the main cause of the globe’s warming since 1950, part of Mr. Gore’s message that few scientists dispute. But it also portrayed climate change as a slow-motion process. It estimated that the world’s seas in this century would rise a maximum of 23 inches — down from earlier estimates. Mr. Gore, citing no particular time frame, envisions rises of up to 20 feet and depicts parts of New York, Florida and other heavily populated areas as sinking beneath the waves, implying, at least visually, that inundation is imminent.

And ... Benny J. Peiser, a social anthropologist in Britain who runs the Cambridge-Conference Network, or CCNet, an Internet newsletter on climate change and natural disasters, challenged the claim of scientific consensus with examples of pointed disagreement. “Hardly a week goes by,” Dr. Peiser said, “without a new research paper that questions part or even some basics of climate change theory,” including some reports that offer alternatives to human activity for global warming.

Also

"Listen to what I say, not what I do" The big salesmen for trading carbon credits set themselves up to profit from people who believe them.

Iraq good news - sharing the oil revenue

With most of American politics focused on the troop surge and partisan maneuverings over its implementation, another story has gotten lost: The Iraqis themselves have made important progress in a basic economic issue that has fueled the sectarian divide. Ed Morrison reports at The American (James Glassman)

The only real industry in Iraq comes from its only real natural resource: oil. Unfortunately, the reserves of oil are not shared equally among the population groups. Most of the oil is located outside the “Sunni triangle” and the Sunnis have fought the Shi’ites (and the Kurds to a lesser extent) in order to keep them from federalizing Iraq and hoarding all of the oil revenue from their respective areas of the nation. Many Sunnis have been unwilling to accept a democratically-elected government that naturally favors Shi’ites, or the federalism that favors the Kurds. The solution requires the other two other groups to share their revenue in such a way that the Sunnis can feel secure about their ability to survive and to thrive in the new Iraq. Over the past three years, the politicians were unable to settle on an equitable and secure revenue-sharing plan that still allowed the Kurds and the Shi’ites to manage their own resources. But now things have changed. The Kurds, who had held out the longest, agreed to share their oil revenues on a basis that had already won support from the Shi’ites and the Sunnis. Two days later, the Iraqi cabinet approved the deal, and the Iraqi Parliament will likely vote it into law.

Ed Morrison is "Captain Ed" of blog fame

Evidence against man-made global warming - Canada

There are other, more likely candidates than man's burning fossil fuels and emitting CO2. In a ten-part series: National Post in Canada: Cosmic rays:

In another study, directly relevant to today's climate controversy, Dr. Shaviv reconstructed the temperature on Earth over the past 550 million years to find that cosmic ray flux variations explain more than two-thirds of Earth's temperature variance, making it the most dominant climate driver over geological time scales.

The Sun:

"Solar activity can explain a large part of the 20th-century global warming," he states, particularly because of the evidence that has been accumulating over the past decade of the strong relationship that cosmic- ray flux has on our atmosphere. So much evidence has by now been amassed, in fact, that "it is unlikely that [the solar climate link] does not exist." The sun's strong role indicates that greenhouse gases can't have much of an influence on the climate -- that C02 et al. don't dominate through some kind of leveraging effect that makes them especially potent drivers of climate change.

Gore Carbon Credit Phony - Updated

Our distinguished ex-Vice President Albert Gore, Jr. has been proven to be a phony. Not for the first time. Gore has been a consistent scold for years.

Global warming is caused by you, yes, I am talking to YOU. You have to drive less and get a smaller car. No, ride with someone else. Take the bus. YOU have to consume less. Turn down the heat in your home. YOU are the problem. YOU MUST CUT BACK.

The Tennessee Center for Policy Research discovered that the utility bills for one of his homes, his Nashville mansion, are 20 times the average American family home's - electric and gas. Twenty times. How about the other?

The average household in America consumes 10,656 kilowatt-hours (kWh) per year, according to the Department of Energy. In 2006, Gore devoured nearly 221,000 kWh—more than 20 times the national average. Last August alone, Gore burned through 22,619 kWh—guzzling more than twice the electricity in one month than an average American family uses in an entire year. As a result of his energy consumption, Gore’s average monthly electric bill topped $1,359. [This is one home in Nashville, TN. He also has homes in Carthage, TN and in the Washington, DC area.]

How do you explain that, Albert Gore, Jr.?

Well... Of course... The rules apply to you, not to me. You are the problem. I am powerful, so I write the rules. I don't have to follow them.

No, they don't say it. Gore's spokesperson found an alibi.

This doesn't matter because Gore purchases carbon credits to offset his family's excessive energy use. Through a company called Global Investment Management.

Riehl World View investigates and finds the usual. Gore set up a way to make money off his Global Warming scare.

Former Vice President Al Gore has built a Green money-making machine capable of eventually generating billions of dollars for investors, including himself, but he set it up so that the average Joe can't afford to play on Gore's terms.

Here is how it works: Gore sells carbon credits to himself from the company he set up and is an owner of. And you can't do the same, because it is set up for high net-worth individuals, not peons like you and me. Naa naa! Tip to Rush. Update British television is going to show "The Great Global Warming Swindle" Thursday March 8. ISE - UK has the story:

The programme, to be screened on Channel 4 on Thursday March 8, will see a series of respected scientists attack the "propaganda" that they claim is killing the world’s poor. Even the co-founder of Greenpeace, Patrick Moore, is shown, claiming African countries should be encouraged to burn more CO2.

And Mark Steyn takes on Albert Gore, Jr.: Stop me if you've heard this before, but the other day the Rev. Al Gore declared that "climate change" was "the most important moral, ethical, spiritual and political issue humankind has ever faced.'' Ever. I believe that was the same day it was revealed that George W. Bush's ranch in Texas is more environmentally friendly than the Gore mansion in Tennessee.

Economics of Abundance

Mike at TechDirt wrote a series on how economics works when something is not scare, but is in abundance. We know that the price of a commodity tends to equal its marginal cost. But digital music and literature have marginal cost of zero. So this tells us you can't make a living by selling them (for nothing), right? Wrong. His essays are short, so he moves slowly. I assume he does that so his audience picks up the basics and keeps the lesson. He gets lots of comments, so he has readers. The key is not the selling price of zero; we know that is not selling, but giving away. But the cost of zero. It's an opportunity, not a loss. So: Design products that people value - that they will pay for - that utilize the free digital content. Focus on the customers and make up such products then you can have a very good living from zero marginal cost products. The most recent essay has links to all the others. At the bottom of this essay click on the first essay, then the second, etc.

Saying You Can't Compete With Free Is Saying You Can't Compete Period

Along the way he makes several visits to those who most fear zero - the recording and movie industries. His sympathy of them approaches zero. They don't understand the market they are in. George Gilder would have given the same lesson in 800 words. But it's best to have many teachers for different audiences. Kudos to Mike.