I knew Stiglitz must have read Collapse by Jared Diamond! (A good read, so is Guns, Germs, and Steel)
Here are his proposals to address Global Climate Change-
1. The USA should ratify the Kyoto Protocol to reduce greenhouse gas emissions.
-The argument that we shouldn’t join until the developing countries are required to make harder commitments is not the way to go about this. We need to be leading the effort to reduce greenhouse gas emissions. After we have joined, we can start working on the planned revisions for 2012, including limiting greenhouse gas emissions in the developing countries.
2. Countries complying with the Kyoto Protocol should seek countervailing duties on imports from the USA and any other noncompliant countries through the WTO to pressure the USA to comply to the Kyoto Protocol greenhouse gas emissions standards. Revise the Kyoto Protocol to punish noncompliant countries with trade sanctions similar to the Montreal Protocol system.
-Kyoto needs better enforcement mechanisms and these seem understandable. Hopefully, the USA won’t require such threats to comply to the Kyoto standards, but regardless, I think this will give Kyoto some real muscle.
3. Rainforest Initiative- revise the Kyoto Protocol to financially compensate countries that maintain hardwood forests. The rainforest coalition of countries are willing to commit to greenhouse gas limits if they are paid for maintaining their forests.
-I agree with Stiglitz’s proposal to pay countries for the maintenance of their hardwood forests and biodiversity, but who will pay them?
4. Greenhouse Gas Emissions Tax- revise the Kyoto Protocol to require all participating countries to institute a common tax on greenhouse gas emissions in their countries. The taxes would resolve the issue over how much emissions each country is allowed. The revenue from a greenhouse gas tax, could allow governments to reduce taxes elsewhere.
-Before reading this chapter, I wasn’t not enthusiastic about the idea of a greenhouse gas tax and believed greenhouse gas trading permits was the best way to go to ensure progress on reducing emissions. But, though the emissions trading permits seem to work on the national level, on the global level, it runs into implementation problems. The common tax proposal would probably be easier to implement. Greenhouse gas emissions would cost everyone the same amount, which seems pretty fair, and the developing countries that this might hit hard, will at least get to retain the revenue, and so might offset any ill effects with tax cuts elsewhere. But how would the tax be collected. I imagine advanced countries such as some in East Asia, North America, and Europe could develop collection systems by taxing corporations, gasoline, and electricity, but how about developing countries. Probably quite a few could manage such a tax and those that couldn’t would probably find an emissions trading system even more impossible anyway. The main concern is that there won’t be clear targets. Maybe Kyoto can set global targets for the common tax to reduce emissions and raise the tax accordingly to meet those goals. Also, maybe Kyoto can allow those developed countries that have already started using the emissions trading system to opt to continue that system. Governments could then choose whichever system would work best for their country. Lastly, I think Kyoto’s goals even in such a system should have less strict goals for developing countries than developed ones, so if the tax had to raised really high to meet the goals, maybe the developing countries would be allowed to keep their tax rates lower.
Ideally, Singer’s proposal for a global emissions trading system based on a per capita basis according to either the UN population projections for 2050 or based on the current population proportions would be enacted. In practice, however, if this proposal is unworkable, then the common tax would be an acceptable alternative.
Saturday, May 26, 2007
Stiglitz- Lifting the Resource Curse
Stiglitz Natural Resource Extraction Proposals:
1. Natural resource wealth dependent countries should have progressive income taxation. Since those profiting off natural resources are selling a country’s raw material, there is not as much of a concern over the incentive to work.
-I agree, the loss in incentives doesn’t seem as much of a concern. Since most of the rich are profiting off selling public resources, others should get some of those profits back. However, the country shouldn’t go overboard with progressivity.
2. Windfall Profits Tax for oil, gas, and other natural resource companies. If the costs of extraction and marketing remain constant, any increase in the price of a natural resource is pure rent and should go to the government.
-I’m not so sure that higher prices are pure rent. If there is a greater demand or reduced supply, it seems that the company should get some of that increased profit. Keep in mind the extensive investment that companies put in to purchase rights, maintain operations when prices fall, and explore for the resource, in addition to the extraction itself. Windfall profits provide companies with the incentive to explore for new reserves and make up for losses when prices are low.
-Perhaps a tax on windfall profits that allows both the company and the government to have a portion of the windfall profits would be alright.
3. Extraction Tax should not have deductibles. This makes it harder for companies to cheat.
-An extraction tax makes sense. The company should pay for removing a valuable resource from a country. If the tax low enough there should be no need for deductibles.
-There was a proposal for an extraction tax in California, but the writers of the initiative, wanted it to be a constitutional amendment that could not be amended itself, and added all of these complex details that made the initiative over 20 pages long, it failed, with good reason. An extraction tax should remain simple.
4. All countries should forbid their firms from bribing foreign governments, and conduct fair auctioning of publicly owned rights. This ensures the most efficient company gets the job providing the most revenue to the government.
-I can’t believe that as recent as the 1996, other developed countries allowed their companies to bribe foreign nations, and that they would be reluctant to enact such legislation. Bribery goes flagrantly against the concept of rule of law. An efficient market must not have bribery, and in this case should have a workable auctioning process. Maybe the WTO should have all its members agree to forbid its companies from bribing foreign governments. Ending such bribery is in the world’s best interest, improving the efficiency of world market.
5. Natural resource rich developing countries should nationalize oil and mining. They are often equally efficient and provide more revenue.
-If a country has a somewhat efficient uncorrupt nationalized oil or mining company, then it should keep it so the country can gain extra revenue. However, if the country has already privatized, it should only nationalize if it respects the contracts that the government has agreed to.
6. Renegotiate contracts to ensure government receives a fair share of value for its natural resources. For example, Botswana renegotiated its diamond contract with De Beers to increase its share of the business from 15% to 50%.
-Again, a country should try to renegotiate for a higher share of revenue for its natural resources, but should maintain respect for contract law throughout the process.
7. Stabilization Funds should be established to invest government revenue from natural resource extraction and purchase any necessary imports. The prices of natural resources are often volatile, which results in volatile revenue levels, so the stabilization fund will help prevent price shocks. In addition, converting natural resource revenue into domestic currency results in appreciation of the domestic currency, so the stabilization fund would protect against appreciation of the currency that could harm other export industries.
-ie. Norway, Chile, Botswana
-This would be a interesting way to maintain stability of the economy, while still profiting off natural resource extraction.
-Of course some profits would still go to spending I presume. Maybe this would allow the country to maintain low interest rates.
8. IMF should reform accounting frameworks to use the Green Net National Product (Green NNP) in determining the growth of countries in a way that omits scarce resource sales and includes environmental degradation. IMF should reform its accounting of deficits to not consider deficit reduction by use of revenue from scarce resources.
-I’ve never heard of Green NNP. How is it calculated to incorporate resource use and environmental degradation?
-This might help resource-rich countries focus on sustainability.
Stiglitz 7 Proposal Action Agenda for the International Community:
1. Extractive Industries Transparency Initiative- all countries should agree not to give any tax deductions to extractive industries for payments to foreign governments unless they fully disclose what was paid and how much of the resource was extracted to help end corrupt practices in the extractive industries.
-How effective will this really be? Might this just add paperwork for extractive industries, increasing their costs? It would be worthwhile if it’s actually effective at stopping corrupt practices.
2. Reducing Arms Sales- international community should impose a heavy tax on the sale of arms and check the source of the money paying for arms. The acquisition of arms should be made more difficult and put under greater scrutiny to prevent armed conflict over natural resources.
-certainly reducing the arms trade is important, but this shouldn’t overly inhibit NATO members for instance from trading with each other.
3. Certification- Diamond certification is already required for the sale of diamonds by the United Nations and enforced to a certain extent. Marine Stewardship Council (MSC) Certified Fish or similar certification requirements would help ensure sustainable fishing practices. Forest Stewardship Council (FSC) Certified Hardwood or similar certification requirements would help ensure sustainable logging practices and prevent deforestation.
-Certification requirements definitely should be implemented to ensure sustainable practices. If the international community refuses, then the US should ban the sale or purchase of non-certified hardwood (and fish) in its country.
4. Targeting Financial Assistance- developed countries should refuse to provide aid to a developing country unless the condition that the developing country is collecting its full share of the profits from resource extraction.
-Wait. Stiglitz advocating for Foreign Aid tied to Conditions?! Weird. I guess there are always some conditions for aid, and as he says, the foreign aid should be just given to more responsible developing countries, not kept by the developed countries.
-But just what is a country’s fair share of the profits?
5. Setting Norms- The World Bank or some other international body should ensure extractive industries treat developing countries fairly, develop auction procedures to improve likelihood developing countries get larger fraction of value, design model contracts that ensure fair treatment of developing countries, and determine what fraction of value a developing country is receiving for a resource.
-Wow! That sounds wonderful. Could the World Bank really do all that successfully? Maybe if Stiglitz was President of the World Bank he could do this.
6. Limiting Environmental Damage- all developed countries should guarantee that any environmental damage will be fully repaired with clear and high standards for what that means.
-This isn’t already in place? Countries should address this at the next summit meeting.
7. Enforcement- Trade Agreements should authorize sanctions against companies and countries that engage in unfair trade practices including failure to subscribe to extractive industries transparency initiative and other anti-bribery measures.
-if the extractive industries transparency initiative is an effective means at curbing bribery and other corrupt practices, it obviously needs some enforcement. Could trade agreements really work to enforce it?
1. Natural resource wealth dependent countries should have progressive income taxation. Since those profiting off natural resources are selling a country’s raw material, there is not as much of a concern over the incentive to work.
-I agree, the loss in incentives doesn’t seem as much of a concern. Since most of the rich are profiting off selling public resources, others should get some of those profits back. However, the country shouldn’t go overboard with progressivity.
2. Windfall Profits Tax for oil, gas, and other natural resource companies. If the costs of extraction and marketing remain constant, any increase in the price of a natural resource is pure rent and should go to the government.
-I’m not so sure that higher prices are pure rent. If there is a greater demand or reduced supply, it seems that the company should get some of that increased profit. Keep in mind the extensive investment that companies put in to purchase rights, maintain operations when prices fall, and explore for the resource, in addition to the extraction itself. Windfall profits provide companies with the incentive to explore for new reserves and make up for losses when prices are low.
-Perhaps a tax on windfall profits that allows both the company and the government to have a portion of the windfall profits would be alright.
3. Extraction Tax should not have deductibles. This makes it harder for companies to cheat.
-An extraction tax makes sense. The company should pay for removing a valuable resource from a country. If the tax low enough there should be no need for deductibles.
-There was a proposal for an extraction tax in California, but the writers of the initiative, wanted it to be a constitutional amendment that could not be amended itself, and added all of these complex details that made the initiative over 20 pages long, it failed, with good reason. An extraction tax should remain simple.
4. All countries should forbid their firms from bribing foreign governments, and conduct fair auctioning of publicly owned rights. This ensures the most efficient company gets the job providing the most revenue to the government.
-I can’t believe that as recent as the 1996, other developed countries allowed their companies to bribe foreign nations, and that they would be reluctant to enact such legislation. Bribery goes flagrantly against the concept of rule of law. An efficient market must not have bribery, and in this case should have a workable auctioning process. Maybe the WTO should have all its members agree to forbid its companies from bribing foreign governments. Ending such bribery is in the world’s best interest, improving the efficiency of world market.
5. Natural resource rich developing countries should nationalize oil and mining. They are often equally efficient and provide more revenue.
-If a country has a somewhat efficient uncorrupt nationalized oil or mining company, then it should keep it so the country can gain extra revenue. However, if the country has already privatized, it should only nationalize if it respects the contracts that the government has agreed to.
6. Renegotiate contracts to ensure government receives a fair share of value for its natural resources. For example, Botswana renegotiated its diamond contract with De Beers to increase its share of the business from 15% to 50%.
-Again, a country should try to renegotiate for a higher share of revenue for its natural resources, but should maintain respect for contract law throughout the process.
7. Stabilization Funds should be established to invest government revenue from natural resource extraction and purchase any necessary imports. The prices of natural resources are often volatile, which results in volatile revenue levels, so the stabilization fund will help prevent price shocks. In addition, converting natural resource revenue into domestic currency results in appreciation of the domestic currency, so the stabilization fund would protect against appreciation of the currency that could harm other export industries.
-ie. Norway, Chile, Botswana
-This would be a interesting way to maintain stability of the economy, while still profiting off natural resource extraction.
-Of course some profits would still go to spending I presume. Maybe this would allow the country to maintain low interest rates.
8. IMF should reform accounting frameworks to use the Green Net National Product (Green NNP) in determining the growth of countries in a way that omits scarce resource sales and includes environmental degradation. IMF should reform its accounting of deficits to not consider deficit reduction by use of revenue from scarce resources.
-I’ve never heard of Green NNP. How is it calculated to incorporate resource use and environmental degradation?
-This might help resource-rich countries focus on sustainability.
Stiglitz 7 Proposal Action Agenda for the International Community:
1. Extractive Industries Transparency Initiative- all countries should agree not to give any tax deductions to extractive industries for payments to foreign governments unless they fully disclose what was paid and how much of the resource was extracted to help end corrupt practices in the extractive industries.
-How effective will this really be? Might this just add paperwork for extractive industries, increasing their costs? It would be worthwhile if it’s actually effective at stopping corrupt practices.
2. Reducing Arms Sales- international community should impose a heavy tax on the sale of arms and check the source of the money paying for arms. The acquisition of arms should be made more difficult and put under greater scrutiny to prevent armed conflict over natural resources.
-certainly reducing the arms trade is important, but this shouldn’t overly inhibit NATO members for instance from trading with each other.
3. Certification- Diamond certification is already required for the sale of diamonds by the United Nations and enforced to a certain extent. Marine Stewardship Council (MSC) Certified Fish or similar certification requirements would help ensure sustainable fishing practices. Forest Stewardship Council (FSC) Certified Hardwood or similar certification requirements would help ensure sustainable logging practices and prevent deforestation.
-Certification requirements definitely should be implemented to ensure sustainable practices. If the international community refuses, then the US should ban the sale or purchase of non-certified hardwood (and fish) in its country.
4. Targeting Financial Assistance- developed countries should refuse to provide aid to a developing country unless the condition that the developing country is collecting its full share of the profits from resource extraction.
-Wait. Stiglitz advocating for Foreign Aid tied to Conditions?! Weird. I guess there are always some conditions for aid, and as he says, the foreign aid should be just given to more responsible developing countries, not kept by the developed countries.
-But just what is a country’s fair share of the profits?
5. Setting Norms- The World Bank or some other international body should ensure extractive industries treat developing countries fairly, develop auction procedures to improve likelihood developing countries get larger fraction of value, design model contracts that ensure fair treatment of developing countries, and determine what fraction of value a developing country is receiving for a resource.
-Wow! That sounds wonderful. Could the World Bank really do all that successfully? Maybe if Stiglitz was President of the World Bank he could do this.
6. Limiting Environmental Damage- all developed countries should guarantee that any environmental damage will be fully repaired with clear and high standards for what that means.
-This isn’t already in place? Countries should address this at the next summit meeting.
7. Enforcement- Trade Agreements should authorize sanctions against companies and countries that engage in unfair trade practices including failure to subscribe to extractive industries transparency initiative and other anti-bribery measures.
-if the extractive industries transparency initiative is an effective means at curbing bribery and other corrupt practices, it obviously needs some enforcement. Could trade agreements really work to enforce it?
A Marshall Plan for Latin America?
http://www.commondreams.org/views04/0819-10.htm
The writer seems to have a liberal bent, but much of the analysis is reminicent of Stiglitz. What do you think?
I think a Marshall Plan for the entire Americas, though politically and economically beneficial to the region, would be a bit too costly all at once. Maybe we could focus on Mexico, Central America, and the Caribbean over the next 5 years provide foreign grant aid, without the conditionalities, and get together with those countries to discuss how to improve economic development OECD style. Then, after we start making some good progress in the Northern part of the Americas start heading south over the next 15 years?
http://usinfo.state.gov/usa/infousa/facts/democrac/57.htm
above is a link giving an overview of the actual marshall plan
$13 billion back then equates to roughly $100 billion today. So maybe $100 billion over 4 years to Mexico, Central America, and the Caribbean? Then something similar a few years later for the rest of the Americas. That support along with a commitment to a solid development plan by the participating countries might finally produce the results Latin America and the US as their neighbor has long sought.
What do you think?
The writer seems to have a liberal bent, but much of the analysis is reminicent of Stiglitz. What do you think?
I think a Marshall Plan for the entire Americas, though politically and economically beneficial to the region, would be a bit too costly all at once. Maybe we could focus on Mexico, Central America, and the Caribbean over the next 5 years provide foreign grant aid, without the conditionalities, and get together with those countries to discuss how to improve economic development OECD style. Then, after we start making some good progress in the Northern part of the Americas start heading south over the next 15 years?
http://usinfo.state.gov/usa/infousa/facts/democrac/57.htm
above is a link giving an overview of the actual marshall plan
$13 billion back then equates to roughly $100 billion today. So maybe $100 billion over 4 years to Mexico, Central America, and the Caribbean? Then something similar a few years later for the rest of the Americas. That support along with a commitment to a solid development plan by the participating countries might finally produce the results Latin America and the US as their neighbor has long sought.
What do you think?
Multinational Corporations- Are Monopolies Always Bad?
I thought Stiglitz went a little to far in his attack on monopolies. Though monopolies can be highly detrimental, sometimes they are reasonable. He neglects to consider the presence of economies of scale in the global economy. An international system for prosecuting bad monopolies would be good, but for others, regulation would be sufficient.
Global Greenbacks?
I recall earlier in the reading Stiglitz mentioned establishing a system of Global Greenbacks as a reserve currency. Would that actually work? I haven't heard much mention elsewhere of a proposal like this. Would it just be a modification to the current SDRs (Special Drwaing Rights) or would it be a completely new system? Would it still be managed by the IMF? I know Stiglitz is not particularly fond of the IMF.
http://www.globalpolicy.org/socecon/ffd/2002/0322greenback.htm
http://www.globalpolicy.org/socecon/ffd/2002/0322greenback.htm
Tuesday, May 15, 2007
Stiglitz- Patents, Profits, and People
Stiglitz proposals:
1. Allow different Intellectual Property laws for undeveloped, developing, and developed countries
-This might be a good reform, if the details of who counts as what level of development and what the differences in laws will be in different countries
2. Reduce length and breadth of patents
-Reducing length of patents to 10 years, or at least 15 would be reasonable.
20 years is just overboard. Technologies in medicine and other specific types of patents maybe could have even shorter lengths (perhaps 5yrs)
-Reducing breadth of patents is especially important. Also gene patents should not be given unless there’s a specific type of treatment, just identifying the gene shouldn’t count for anything.
3. Developed countries should provide patented medicines at cost to developing countries
-Developed countries should provide the patent holder with a limited royalty, but if there’s a need in developing countries, that doesn’t mean full market price.
4. Issue compulsory licenses when there is urgent need to broaden access to technology or medicines, allowing generic manufacturers to produce medicines at much lower prices
-for special cases in developing countries
5. Governments and foundations could provide a Guarantee Fund, pledging to spend a minimum amount of money if a new or more effective medicine is invented
-would there still be a need for this if we have the Innovation Fund?
6. Governments and foundations should provide an Innovation Fund, offering big rewards of monetary prizes based on the importance of the invention
-this would be great, but then the invention should be made available without patent restrictions. I suppose this for inventions that wouldn’t be very lucrative anyway, like malaria vaccines/medicines.
7. Have an international agreement recognizing traditional knowledge, and prohibiting bio-piracy
-People should still be allowed to innovate and use traditional knowledge for commercial purposes, but just not with the exclusive right to that knowledge
8. All countries, including the USA, must sign the biodiversity convention, guaranteeing biodiversity property rights
-if developing countries own potentially valuable biological organisms, they should be provided with the incentive to preserve that biodiversity through the chance to profit off any medicines developed using their biodiversity.
9. TRIPs should be reformed drastically; discussions over global standards for intellectual property should be removed from WTO and placed in a WIPO (World Intellectual Property Organization) to give developing countries a greater voice
-TRIPs definitely need reforming, but should we create WIPO?
10. developed countries should finance strong legal assistance for developing countries to help fight claims involving intellectual rights
-maybe through (mandatory?) contributions to either WTO or WIPO
11. NAFTA should repeal provision in Chapter 11 that requires government compensation to companies for regulation, even regulations protecting the environment and public health; countries should have right to protect environment, public health, and culture
-What type of crazy provision compensates industries for their own wrongdoing!?
-In addition to repealing this provision, perhaps NAFTA should establish a tribunal court to arbitrate on matters of inter-country disputes, with some increased level of uniformity in regulations among the 3 countries?
1. Allow different Intellectual Property laws for undeveloped, developing, and developed countries
-This might be a good reform, if the details of who counts as what level of development and what the differences in laws will be in different countries
2. Reduce length and breadth of patents
-Reducing length of patents to 10 years, or at least 15 would be reasonable.
20 years is just overboard. Technologies in medicine and other specific types of patents maybe could have even shorter lengths (perhaps 5yrs)
-Reducing breadth of patents is especially important. Also gene patents should not be given unless there’s a specific type of treatment, just identifying the gene shouldn’t count for anything.
3. Developed countries should provide patented medicines at cost to developing countries
-Developed countries should provide the patent holder with a limited royalty, but if there’s a need in developing countries, that doesn’t mean full market price.
4. Issue compulsory licenses when there is urgent need to broaden access to technology or medicines, allowing generic manufacturers to produce medicines at much lower prices
-for special cases in developing countries
5. Governments and foundations could provide a Guarantee Fund, pledging to spend a minimum amount of money if a new or more effective medicine is invented
-would there still be a need for this if we have the Innovation Fund?
6. Governments and foundations should provide an Innovation Fund, offering big rewards of monetary prizes based on the importance of the invention
-this would be great, but then the invention should be made available without patent restrictions. I suppose this for inventions that wouldn’t be very lucrative anyway, like malaria vaccines/medicines.
7. Have an international agreement recognizing traditional knowledge, and prohibiting bio-piracy
-People should still be allowed to innovate and use traditional knowledge for commercial purposes, but just not with the exclusive right to that knowledge
8. All countries, including the USA, must sign the biodiversity convention, guaranteeing biodiversity property rights
-if developing countries own potentially valuable biological organisms, they should be provided with the incentive to preserve that biodiversity through the chance to profit off any medicines developed using their biodiversity.
9. TRIPs should be reformed drastically; discussions over global standards for intellectual property should be removed from WTO and placed in a WIPO (World Intellectual Property Organization) to give developing countries a greater voice
-TRIPs definitely need reforming, but should we create WIPO?
10. developed countries should finance strong legal assistance for developing countries to help fight claims involving intellectual rights
-maybe through (mandatory?) contributions to either WTO or WIPO
11. NAFTA should repeal provision in Chapter 11 that requires government compensation to companies for regulation, even regulations protecting the environment and public health; countries should have right to protect environment, public health, and culture
-What type of crazy provision compensates industries for their own wrongdoing!?
-In addition to repealing this provision, perhaps NAFTA should establish a tribunal court to arbitrate on matters of inter-country disputes, with some increased level of uniformity in regulations among the 3 countries?
Monday, May 7, 2007
Stiglitz- Making Trade Fair
Why don’t we replace Wolfowitz with Stiglitz as President of the World Bank?
I think he’d do a much better job.
Anyhow, Stiglitz Making Trade Fair Proposals:
1. all developed countries should follow the “European Initiative” to unilaterally lower tariffs against developing countries
-I agree, tariffs should be lower not higher on products from developing countries
2. allow a single cross-industry rate for-revenue-tariff in developing countries to provide job security and revenue for infrastructure investment
-a low for-revenue tariff in developing countries seems reasonable, as long as it is eventually lowered as the country develops
3. all developed countries should reduce agricultural subsidies; ie. abolish subsidies to farmers with incomes over $100,000, cap subsidies to any one farmer at $100,000
-the USA, Nippon, and Europe, need to reform and reduce their agriculture subsidies; I’d go with a higher ie. $200,000 cap (as a transition step)
4. all developed countries should reduce or abolish water subsidies, subsidies for cotton, sugar, and other agricultural products
-water subsidies is a huge problem, especially in the western USA; we got people farming on desert land because of artificially low water prices, people need to know the real cost of that water, so let’s phase out water subsidies over the next few years
-we’re spending way too much on cotton, sugar, and other agri subsidies, also federal disaster relief insurance should be priced to farmers based on the risk of disaster for the farm, and the whole subsidy system is due for some simplification; also what if we pooled our subsidies with the NAFTA countries so that Mexican farmers could benefit from the same level of subsidy?
5. all developed countries should remove escalating tariffs against developing countries; ie. reduce higher tariffs on industrial products to be no more than on raw materials
-this is just ridiculous! The concept of escalating tariffs seems somewhat imperialistic to me, tariffs on developing country products should not disincentive them from developing industry and manufacturing
6. the USA should open up to free trade in shipping; allowing developing countries to undertake unskilled-labor-intensive service of shipping
-shipping seems to me to be a more domestic function, but maybe a partial liberalization of shipping would be worth a try
7. all countries should liberalize the movement of labor; allow more unskilled-workers to more easily seek jobs in different countries
-liberalization of labor markets should proceed slowly to give countries time to adjust to increasing labor movements. Also, such liberalization has some security concerns. The USA could make immigration cheaper and less complicated and possibly expand the cap. Meanwhile it could create a new guest-worker program with Mexico and possibly extend it to Canada and some Central American countries.
8. all developed countries should facilitate the transfer of remittances to developing countries; allow foreign workers cheaply send back money, the USA is already doing so
-other developed countries need to get with the program, workers should be able to send money back to their home country without losing much of their earnings
9. developing countries should use safeguard tariffs more often; temporary tariffs to help country adjust to “surge” in imports
-especially since developing companies lack the infrastructure to transition into new industries or to improve efficiency as quickly as developed countries
10. establish an international tribunal to judge that safeguard tariffs are imposed only when there is a casual link between the import surge and the industry’s problems
-would this be part of the WTO? Maybe an overhauled WTO could have one.
11. have a single standard for unfair trade practices that applies both domestically and internationally; accusations of predatory pricing must show there was a reasonable prospect of attaining sufficient market power for long enough to recoup losses
-cheap imports can help the economy as long as the country can adjust
12. establish an international tribunal to judge whether a country is guilty of dumping or other unfair trade practices, preventing countries from wrongly accusing other countries
-would this be the same tribunal that deals with safeguard tariffs? Under WTO?
13. establish an international tribunal to judge whether a trade restriction based on safety, health, quality concerns is legitimate; allow reasonable labeling of products
-this sounds kind of like what the WTO has according to Singer, except giving a bit more understanding for health, quality, safety, environmental concerns
14. revise or abolish rules of origin; don’t restrict free trade agreements to only products with majority of inputs produced in the same country
-if part of the product was produced in a country outside the trade agreement, wouldn’t a tariff have been levied on that part of the input when it was imported
into the country making the final product anyway? No need to double tax.
15. avoid bilateral trade agreements; such agreements often don’t expand trade, give preference to one country over others, hurting opportunities for multilateral agreements, and more lopsided against the developing country
-I’ve never thought of bilateral trade agreements as a bad thing before. I’ll need some time to think it over… Stiglitz’s argument is compelling. Maybe congress shouldn’t ratify the bilateral agreement with Colombia. I suppose a closer and more cautious look into the specifics of such agreements is worthwhile.
16. establish an international tribunal/panel to judge whether a bilateral trade agreement leads to more trade diversion than creation and, if so, not allow it
-would this tribunal be under the WTO? I don’t think the tribunal/panel should have power to penalize countries, but maybe offer recommendations
17. have a true development-oriented trade agenda:
focus on unskilled-labor-intensive services and migration,
focus on circumscribing bribery, arms sales, bank secrecy, tax competition to attract businesses,
increase transparency in trade negotiations,
improve enforcement by allowing developing countries, at least, to sell enforcement rights so that smaller countries will be able to enforce trade violations too
-sounds good. I particularly like the idea of letting small countries sell enforcement rights. Score one for the little guy!
18. domestically, provide more progessive income taxation, better adjustment assistance, stronger safety nets, better macro-economic management, raise minimum wage/EITC, more investment in technology and education, increase grant aid to developing countries
-these sound good too, but how would they be implemented? Increasing the EITC would help boost bottom incomes and progressivity (but not so much as to mess up work incentives). Adjustment assistance and safety nets is a little more complex; we can give unemployment/income insurance (careful not to give too much), job training programs (expensive), I don’t know too much about it. Investing more in technology and education is a must. As far as helping out developed countries, why not give 1% of our GDP to foreign countries as grant aid and direct investment. Maybe we could have a “Marshall Plan” for Latin America… take that Hugo Chavez!
I think he’d do a much better job.
Anyhow, Stiglitz Making Trade Fair Proposals:
1. all developed countries should follow the “European Initiative” to unilaterally lower tariffs against developing countries
-I agree, tariffs should be lower not higher on products from developing countries
2. allow a single cross-industry rate for-revenue-tariff in developing countries to provide job security and revenue for infrastructure investment
-a low for-revenue tariff in developing countries seems reasonable, as long as it is eventually lowered as the country develops
3. all developed countries should reduce agricultural subsidies; ie. abolish subsidies to farmers with incomes over $100,000, cap subsidies to any one farmer at $100,000
-the USA, Nippon, and Europe, need to reform and reduce their agriculture subsidies; I’d go with a higher ie. $200,000 cap (as a transition step)
4. all developed countries should reduce or abolish water subsidies, subsidies for cotton, sugar, and other agricultural products
-water subsidies is a huge problem, especially in the western USA; we got people farming on desert land because of artificially low water prices, people need to know the real cost of that water, so let’s phase out water subsidies over the next few years
-we’re spending way too much on cotton, sugar, and other agri subsidies, also federal disaster relief insurance should be priced to farmers based on the risk of disaster for the farm, and the whole subsidy system is due for some simplification; also what if we pooled our subsidies with the NAFTA countries so that Mexican farmers could benefit from the same level of subsidy?
5. all developed countries should remove escalating tariffs against developing countries; ie. reduce higher tariffs on industrial products to be no more than on raw materials
-this is just ridiculous! The concept of escalating tariffs seems somewhat imperialistic to me, tariffs on developing country products should not disincentive them from developing industry and manufacturing
6. the USA should open up to free trade in shipping; allowing developing countries to undertake unskilled-labor-intensive service of shipping
-shipping seems to me to be a more domestic function, but maybe a partial liberalization of shipping would be worth a try
7. all countries should liberalize the movement of labor; allow more unskilled-workers to more easily seek jobs in different countries
-liberalization of labor markets should proceed slowly to give countries time to adjust to increasing labor movements. Also, such liberalization has some security concerns. The USA could make immigration cheaper and less complicated and possibly expand the cap. Meanwhile it could create a new guest-worker program with Mexico and possibly extend it to Canada and some Central American countries.
8. all developed countries should facilitate the transfer of remittances to developing countries; allow foreign workers cheaply send back money, the USA is already doing so
-other developed countries need to get with the program, workers should be able to send money back to their home country without losing much of their earnings
9. developing countries should use safeguard tariffs more often; temporary tariffs to help country adjust to “surge” in imports
-especially since developing companies lack the infrastructure to transition into new industries or to improve efficiency as quickly as developed countries
10. establish an international tribunal to judge that safeguard tariffs are imposed only when there is a casual link between the import surge and the industry’s problems
-would this be part of the WTO? Maybe an overhauled WTO could have one.
11. have a single standard for unfair trade practices that applies both domestically and internationally; accusations of predatory pricing must show there was a reasonable prospect of attaining sufficient market power for long enough to recoup losses
-cheap imports can help the economy as long as the country can adjust
12. establish an international tribunal to judge whether a country is guilty of dumping or other unfair trade practices, preventing countries from wrongly accusing other countries
-would this be the same tribunal that deals with safeguard tariffs? Under WTO?
13. establish an international tribunal to judge whether a trade restriction based on safety, health, quality concerns is legitimate; allow reasonable labeling of products
-this sounds kind of like what the WTO has according to Singer, except giving a bit more understanding for health, quality, safety, environmental concerns
14. revise or abolish rules of origin; don’t restrict free trade agreements to only products with majority of inputs produced in the same country
-if part of the product was produced in a country outside the trade agreement, wouldn’t a tariff have been levied on that part of the input when it was imported
into the country making the final product anyway? No need to double tax.
15. avoid bilateral trade agreements; such agreements often don’t expand trade, give preference to one country over others, hurting opportunities for multilateral agreements, and more lopsided against the developing country
-I’ve never thought of bilateral trade agreements as a bad thing before. I’ll need some time to think it over… Stiglitz’s argument is compelling. Maybe congress shouldn’t ratify the bilateral agreement with Colombia. I suppose a closer and more cautious look into the specifics of such agreements is worthwhile.
16. establish an international tribunal/panel to judge whether a bilateral trade agreement leads to more trade diversion than creation and, if so, not allow it
-would this tribunal be under the WTO? I don’t think the tribunal/panel should have power to penalize countries, but maybe offer recommendations
17. have a true development-oriented trade agenda:
focus on unskilled-labor-intensive services and migration,
focus on circumscribing bribery, arms sales, bank secrecy, tax competition to attract businesses,
increase transparency in trade negotiations,
improve enforcement by allowing developing countries, at least, to sell enforcement rights so that smaller countries will be able to enforce trade violations too
-sounds good. I particularly like the idea of letting small countries sell enforcement rights. Score one for the little guy!
18. domestically, provide more progessive income taxation, better adjustment assistance, stronger safety nets, better macro-economic management, raise minimum wage/EITC, more investment in technology and education, increase grant aid to developing countries
-these sound good too, but how would they be implemented? Increasing the EITC would help boost bottom incomes and progressivity (but not so much as to mess up work incentives). Adjustment assistance and safety nets is a little more complex; we can give unemployment/income insurance (careful not to give too much), job training programs (expensive), I don’t know too much about it. Investing more in technology and education is a must. As far as helping out developed countries, why not give 1% of our GDP to foreign countries as grant aid and direct investment. Maybe we could have a “Marshall Plan” for Latin America… take that Hugo Chavez!
Thursday, April 26, 2007
Globalization Blog1
Wolf’s discussion of globalization- The reduced labor mobility as a cause of wage inequality noted by Wolf is interesting, however I wonder to what extent reducing migration barriers would reduce this inequality.
Wolf’s assertion of the changing attitudes toward free trade, free market, and globalization sometimes becomes overly generalized. With respect to labor mobility, during the pre-war era of undprecedented labor mobility, there were moves to restrict immigration into the United States from Asian countries, as well as strong anti-immigration attitudes and violent riots as a result. Meanwhile, the past half century has seen some relaxing of labor mobility immigration restrictions in the USA. The Bracero system of the 1940s-60s surely represented a high degree of labor mobility at least between the US and Mexico (though this system ended in 1960s to be replaced by a steep rise in illegal immigration) and then the immigration reform of the 1960s that relaxed limits on immigration into the USA. Generally, Wolf is right in that labor mobility was higher a hundred years ago, however.
I also think he exaggerates on the abandonment of free trade and global economic integration during the interwar period, though in general correct. Wolf does mention the reduction in US tariffs starting in 1934 and the following trade liberalization (WWII probably resulted in a large degree of import substitution temporarily reversing the trend until after the war) so though the ideas of free trade were not completely abandoned, the world as whole can be seen as moving toward more closed economies.
Stiglitz’s discussion of globalization- Stiglitz argues that globalization is not inevitably a good thing, that if orchestrated properly can be extremely helpful to developing countries, but could actually be hurtful if orchestrated improperly. In the preface he asserts that trade-offs do exist and that there are multiple workable policies. He argues that income redistribution is not as costly to economic growth as some fear. Stiglitz states that free markets are dependent on government involvement and enforcement to function properly. Certainly some level of government intervention is necessary, but it will be interesting to find out what he believes the proper balance should be.
Both Wolf and Stiglitz agree that the global financial system needs reform, that the government has a vital role in ensuring the proper function of the free market, that investments should be made carefully, and cite the interwar period’s decline in globalization and the contribution of Keynes to saving the free market system during the great depression. However, while Wolf finds increasing globalization the solution to the perceived problems, Stiglitz believes globalization needs to proceed in a different way.
Wolf’s assertion of the changing attitudes toward free trade, free market, and globalization sometimes becomes overly generalized. With respect to labor mobility, during the pre-war era of undprecedented labor mobility, there were moves to restrict immigration into the United States from Asian countries, as well as strong anti-immigration attitudes and violent riots as a result. Meanwhile, the past half century has seen some relaxing of labor mobility immigration restrictions in the USA. The Bracero system of the 1940s-60s surely represented a high degree of labor mobility at least between the US and Mexico (though this system ended in 1960s to be replaced by a steep rise in illegal immigration) and then the immigration reform of the 1960s that relaxed limits on immigration into the USA. Generally, Wolf is right in that labor mobility was higher a hundred years ago, however.
I also think he exaggerates on the abandonment of free trade and global economic integration during the interwar period, though in general correct. Wolf does mention the reduction in US tariffs starting in 1934 and the following trade liberalization (WWII probably resulted in a large degree of import substitution temporarily reversing the trend until after the war) so though the ideas of free trade were not completely abandoned, the world as whole can be seen as moving toward more closed economies.
Stiglitz’s discussion of globalization- Stiglitz argues that globalization is not inevitably a good thing, that if orchestrated properly can be extremely helpful to developing countries, but could actually be hurtful if orchestrated improperly. In the preface he asserts that trade-offs do exist and that there are multiple workable policies. He argues that income redistribution is not as costly to economic growth as some fear. Stiglitz states that free markets are dependent on government involvement and enforcement to function properly. Certainly some level of government intervention is necessary, but it will be interesting to find out what he believes the proper balance should be.
Both Wolf and Stiglitz agree that the global financial system needs reform, that the government has a vital role in ensuring the proper function of the free market, that investments should be made carefully, and cite the interwar period’s decline in globalization and the contribution of Keynes to saving the free market system during the great depression. However, while Wolf finds increasing globalization the solution to the perceived problems, Stiglitz believes globalization needs to proceed in a different way.
Tuesday, April 24, 2007
Test
Here is the first blog post
http://www.washingtonpost.com/wp-dyn/content/article/2007/04/12/AR2007041202301.html
http://www.washingtonpost.com/wp-dyn/content/article/2007/04/12/AR2007041202301.html
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