Saturday, October 27, 2007

That's gonna leave a mark!

McCain lays a "gotcha" line on Hillary

McCain won the night by acclamation with a brilliant attack on Hillary that not so subtly highlighted his own unique qualification for the presidency. Citing his record on controlling spending, he ridiculed Hillary's proposed $1 million earmark for a Woodstock museum. He didn't make it to Woodstock, McCain explained. He was "tied up at the time."

McCain's edge in this crowded field is that he has proven he has guts, rather than just playing a tough guy on TV like Giuliani and Thompson.

Sunday, October 21, 2007

Do Social Conservatives Heart Huckabee?

Yahoo News:Evangelicals Reject Giuliani
Several thousand Christian conservative voters rebuffed an olive branch from Republican White House hopeful Rudolph Giuliani Saturday, over his support for abortion rights.

The former New York mayor tops Republican national polls in the quickening 2008 race, but was unable to win over a cross-section of a crucial party voting bloc at a huge "Values Voter" conference in Washington.

In a presidential candidate straw poll of 5,775 evangelical voters at the meeting and online, former Massachusetts governor Mitt Romney came out on top, narrowly ahead of former Arkansas governor Mike Huckabee.

.....The poll may also have been susceptible to stacking of online votes by campaigns -- Huckabee won 51 percent of votes of 952 people who voted in person at the conference, and Romney took only 10 percent.

Huckabee seems to have made a good impression. This is a uniquely friendly crowd no doubt. Of course the knock on him has always been that he does really well in retail politics but just can't get the organization and funding together to make a nationwide run work.

Monday, October 08, 2007

I speaka da English real good

CNN, October 8, 2007: Arrests made in Memphis football player slaying

Three men were charged Monday in the fatal campus shooting of a University of Memphis football player, authorities said.

Taylor Bradford, 21, was shot September 30 shortly before police found him fatally wounded in his car, which had crashed into a tree.

All three men were charged with murder in the perpetration of attempted aggravated robbery.

.........There will be a moment of silence at a football game at the university the night after Bradford was killed.

Gotta love those time traveling journalists.

Of course this is from the folks who conveniently put a button to adjust the text size at the top of the story in small light gray text. If you can find it you don't need it.

Tuesday, October 02, 2007

Ricardo is Dead

Thomas Palley: Jack Welch’s Barge: The New Economics of Trade

The classical theory of comparative advantage has driven US trade policy for the past fifty years. That policy, in combination with technical innovations that have lowered costs of transportation and communication, has opened the global economy. Yet paradoxically, this opening has rendered classical trade theory obsolete. That in turn has left the US economically vulnerable because its trade policy remains stuck in the past and based on ideas that no longer hold.

The logic behind classical free trade is that all can benefit when countries specialize in producing those things in which they have comparative advantage. The necessary requirement is that the means of production (capital and technology) are internationally immobile and stuck in each country. That is what globalization has undone.

Several years ago Jack Welch, former CEO of General Electric, captured the new reality when he talked of ideally having “every plant you own on a barge”. The economic logic was that factories should float between countries to take advantage of lowest costs, be they due to under-valued exchange rates, low taxes, subsidies, or a surfeit of cheap labor. Globalization has made Welch’s barge a reality. However, in doing so it has made capital mobility rather than country comparative advantage the engine of trade. And with that change, “free trade” increasingly trades jobs and promotes downward wage equalization.

The U.S. and European response to Welch’s barge has been competitiveness policy that advocates measures such as increased education spending to improve skills; lower corporate tax rates; and investment and R&D incentives. The thinking is increased competitiveness can make Europe and the US more attractive to businesses.

Unfortunately, competitiveness policy is not up to the task of anchoring the barge, and it can even be counter-productive. The core problem is corporations are globally mobile. Thus, government can subsidize R&D spending, but the resulting innovations may simply end up in new offshore factories. Moreover, competitiveness policy easily degenerates into a race to the bottom. For instance, if the US cuts corporation taxes, other countries may match to stay competitive. The result is no gain for the US, while profit taxes are lowered and tax burdens shifted on to wages, which widens income inequality.

Worse yet, capital mobility prompts countries to adopt unfair policies to increase their relative business attractiveness. These policies include disregard of environmental damage; suppression of labor to keep wages low; direct subsidies; and under-valued exchange rates. All are visible in China, which is the poster-child for such abuses.

A critical consequence of Welch’s barge is the creation of a “corporation versus country” divide. Previously, when corporations were nationally based, profit maximization by business contributed to national economic success by ensuring efficient resource use. Today, corporations still maximize profits, but they do so from the standpoint of their global operations. Consequently, what is good for corporations may not be good for country.

.....The emergence of barge-like corporations has reduced the scope for effective competitiveness policy, increased the temptations for unfair policy, and created a wedge between corporate and national interests. This poses two critical policy challenges. First, there is need for rules against unfair competition, which is where exchange rate rules and labor and environment standards enter.

Second, there is need to close the wedge between corporation and country. In the U.S. that calls for such measures as ending preferential tax treatment of profits earned offshore; making it illegal for corporations to reincorporate outside the US to escape US tax laws; and new tax arrangements that encourage jobs and value creation within the US.

......These economic challenges are compounded by political difficulties. In Washington, elite policy thinking is funded and lobbied for by corporations. Consequently, corporations control trade policy at a time when corporate interests differ from the national interest. That is also increasingly true in Brussels. Fifty years ago what was good for GM may really have been good for the US. With Jack Welch’s barge, that may no longer hold.

Ricardo's point was tied to agricultural products, where different climates and terrains along with the developed skills of the workforce allowed for a "comparative advantage" in production (it being more efficient to grow grapes in Portugal and Sheep in Britain as I recall). This still holds true as far as it goes. It is much more efficient to grow grain in Ohio and Oranges in Florida and trade them than to try to grow Oranges and Wheat both places. The problem begins when we start talking about multinational corporations in the same terms as 19th century farmers. Production has become separated from Resources due to the transportation revolution which has made it possible to bring the raw materials to the worker rather than vice versa (as well as the depletion of resources near Western industrial areas). Knowledge has been abstracted from the worker with the rise of the engineer and the decline of the skilled trades worker. A multinational will use the knowledge gained by advanced research in high wage research labs to develop (perhaps in a mid wage country) the product they will produce in a low wage country. Today, a Multinational can afford to bring resources and expertise to the lowest cost worker and then transport the finished product to a high cost environment and still have a profitable arbitrage. This works spectacularly until enough high wage workers are replaced with low wage workers and the formerly high wage economy collapses.

China is a symptom, not the problem. As China suffers from inflation, manufacturers will move to other desperate low wage countries where the same phenomena will play out.

Monday, October 01, 2007

"Terrorism" has jumped the shark

The Newspaper:Chicago, Illinois Suburbs: No Mercy Speed Traps

Police in Chicago, Illinois suburbs are citing terrorism as a reason for "no mercy" speed traps where every motorist stopped by police -- other than fellow police officers -- receives a traffic citation. A Chicago Sun-Times analysis found that a total of thirty towns had a policy where more than 90 percent of drivers stopped must be ticketed.

"There's a lot of people who come in and out, and with all this terrorism and everything else that's going on, we have zero tolerance," North Chicago Police Sergeant Sal Cecala told the Sun-Times. "There's no breaks for the officers to give."

I still remember working the Christmas after 9/11 at an ecommerce distribution center. They tried to play the terrorism card there claiming the increasingly intrusive searches of employees. Of course they only searched us on the way out.....

But in the present Republican "Liberty through Tyranny" environment I'm sure Officer Cecala is on the short list for Guiliani's cabinet.