I was probably a little scattered, that's what happens when I write a post at 9:30 on a Sunday night. I mean to focus on the US experience with most of what I write, since I know more about US politics than any country besides my own, and I have to be careful about discussing New Zealand politics (plus I know most of you guys are Americans). But I should have been clearer here.
I know unions have been waning in New Zealand; there are two unions of significance still in New Zealand, the Post Primary Teachers' Association (note - a public sector union) and the Engineering, Printing and Manufacturer's Union (which has close political linkages to New Zealand's major left-wing party). I understand this is true pretty much everywhere in the West, though the degree varies from country to country.
All the income growth of the last forty years went to the top 10% of income earners. That’s insane and nonsensical and not something that “the political left” should be comfortable with, right?
No, I think you can be justifiably upset about that.
A big reason why it occurred is because of the shuttering of political groups which represented the economic interests of the middle class and the poor in the political system.
This I'm not so sure about. I think the middle class has stagnated due to your with health care system, I'll write a post about it some time. In any case the bottom 90% of people almost certainly contains the median voter, which makes me leery of any explanation relying on disenfranchisement.
I believe that the end of history will only come when the last proton in the universe finally decays.
I'm thinking more of punctuated equilibrium - a big event shakes up existing political coalitions, which then settle into a new equilibrium. Neoliberalism is the left settling into a new equilibrium after the fall of socialism, eventually things will be shaken up anew.
You know, what I find interesting is that a bunch of innocent people are killed by some lunatic in another country and what you immediately think of is how this affects partisan politics in the US.
There are a lot of unpleasant stereotypes about Americans that float around. One of them is that you're provincial to the point of narcissism. The stereotype would have it that Americans are incapable of thinking of the rest of the world as actual places, but are just a backdrop to your country with no other relevance. To give you an example, one of my colleagues has this posted up by her desk. The stereotype is common enough that everyone gets the joke.
Now I happen to think that this attitude to Americans is unfair in general, and yet you are displaying that exact attitude here. Could it be that one crazy Norwegian is reacting to political factors in Norway that have nothing to do with the US? Surely not, that would imply the US isn't the centre of the world. Obviously the Tea Party is to blame! The fact they're already your political opponents is nothing more than an indication of how morally pure you are. You always new people who disagreed with you are evil, and now you have proof!
Don't concern yourself with the fact that conservatism is an ideology that by its very nature is idiosyncratic to the culture in which it exists, that sort of detail will just get in the way of your point scoring.
On behalf of the rest of the planet - grow the fish up.
While I was at university I actually read a paper that discussed the WTO's approach to these cases. The WTO's attitude is that the rules have to be consistent - you can't impose harsher standards on foreign goods than domestic ones. Disparate impact is not a problem, avoiding WTO sanction is as simple as using the same rules for foreign and domestic goods, and applying the rules consistently.
Also, if the WTO finds against you for inconsistency, you can avoid sanction by bringing your environmental laws into line.
I don't see how these requirements could be problematic.
The WTO has codified principles which essentially prohibit the domestic policy of member nations from imposing quality assurances, envirnomental and other regulations, subsidies for domestic sectors of the economy, and restrictions of any kind on imports.
You are mistaken, WTO rules allow trade restrictions for environmental and health reasons. All a country needs to do is A) show scientific evidence of a threat B) subject domestic and imported goods to the same restrictions. All WTO rules stop you from doing is engaging in protectionism while using the environment as an excuse.
If a plan makes economic sense then it makes sense even if we do it alone. If it does not make sense then doing it together is just compounding the error.
I think a carbon tax could only work with international cooperation, otherwise you just end up moving carbon emissions around the world, which is pointless at best, and may be perverse. I agree that it is doomed because of this.
If nuclear fission is a viable strategy, and I believe it is, then we should do it no matter what the rest of the world does. Show them that it works and they will follow. There are substantial benefits to being followed.
I agree. This is where I think policy attention needs to be focused, there are significant political barriers to nuclear fission. I think solar has potential as well, but only time will tell on that one.
The problem is that anyone who could win the X-prize pretty much had a license to print money. There are vast amounts of money being invested in battery research. An X-prize isn’t going add significantly to that.
A good point, but like any economist I think at the margin. Every bit helps.
As a practical measure I don't actually support carbon taxation (I know I used it as an example above, but I was more interested in the general principle than this specific example). Though my objection is more about the fact that there's no way in hell we're ever going to get enough countries to sign up for it.
So that leaves us with second-best solutions, and there my thinking is similar to yours. We need to replace coal as a power source. Right now, nuclear fission is the only thing that fits the bill (right now), and the current international moves away from it in Europe are disquieting. But new technologies would be welcome as well, and I can see a role for government there (ideally through contestable prize funds).
New Zealand has eliminated nearly all of its tariffs and all of its export subsidies. We must be just about one of the only countries on earth that runs an unprotected agricultural industry.
It's definitely true that the gains exceed the losses with free trade.
As to decimating local industries, most of the countries we're talking about have little or no local industry - that's why the labour there is so cheap. And opening trade will shift the patterns of production, some current activates will shrink or disappear, while others rise up. So yes, some industries may well disappear, but the overall effect will be jobs with higher productivity, which means higher pay.
As for actually existing trade policy in the US, most US trade agreements seem to be more about getting countries to adhere to the US's specific take on intellectual property than anything else. also, they often include so many exceptions they are practically useless. I'm less familiar with NAFTA, but mos of the agreements the US tries to close in the Asia-Pacific region are somewhat dubious.
In basic terms, the extent to which capital and labour gain or lose from freer trade depends on two things: relative abundance and specificity (or how easily a resource can be turned to other uses).
In layman's terms: in capital-rich countries profits rise and wages fall in response to liberalising trade, in a capital poor-country (like anywhere in the 3rd world), the reverse is true. The reasons for this are technical, but it comes down to the general principle that the more of something there is, the less it is worth (all things being equal). If a country restricts trade with the outside world, then all that matters is how abundant or scare it is in that country. But when you open trade up, what matters is how abundant or scarce something is in the whole world. This is borne out by the fact 3rd world sweatshops actually pay significantly more than the alternative sources of employment (which are generally pretty dismal - subsistence farming, prostitution and picking through polluted landfills are the most common alternatives, even for the children)
But that's only part of the story. Workers (and shareholders) consume as well as produce, and free trade drives down prices. So if you're a first world worker, your income is likely to fall but prices will also fall, so the real question is which effect is bigger? That depends on how easily you can turn your hand to another line of work. If you are equally productive in some other line of work then you can just change industry. However, if your current line of work is the only thing you're good at you have a problem.
I don't think its as complicated as all that. You identify the major sources of CO2 (coal, petroleum products, I'm sure there are others), you tax them in proportion to the amount of CO2 they emit upon being burned, and you tax them at the point of extraction / importation (unless the imported stuff has already paid a carbon tax in another country).
There's some work involved, but it's not that hard really.
Except that the US is very efficient at turning CO2 into GDP. If the US taxes its carbon emissions and other countries do not then carbon-intensive industries will tend to move to other countries. This may perversely end up increasing CO2 emissions worldwide, and with CO2 it doesn't matter where the emissions occur - the global effect is pretty much the same.
I can see where your coming from, but my essential point is that you can't expect all (or even most) of the human suffering generated by poverty to be automatically met by charity. Therefore, you can't just use private charity as a rejoinder to the question "if you abolish welfare, what will become of the poor?"
Actually one of the advantages of emissions taxation is it uses market forces to mediate those questions. If a pollution source is valuable, and hard to replace people will just eat the tax, but if it can be replaced it will be. Also, the higher prices encourage innovation to improve efficiency or replace the pollutant.
Ironically, I actually have to back-track a little on carbon taxes specifically, since I don't think they'll work due to the intractable coordination problems involved. Emissions taxation is a good solution, but not when you need to get every country on the planet to join in.
I think we're going to need to fall back on second-best solutions for dealing with climate change.
I think you outline one of the useful contributions of ideology. Perhaps the way to address this is to go up a level (because I'm So Meta, Even This Acronym), and pragmatically evaluate ideology.
It seems to me ideology has the following benefits:
1) it gives you a set of values to work with. A pure pragmatists will also have values, but I think is less likely they will realise they have a specific set of values. I see this most particularly is certain public health activists who see to feel that cracking down on fattening foods and smoking is self-evidently good because they don't seem to be counting the consumption benefits of these goods.
2) Ideologues are of the a useful source of outside-the-box thinking. After all, Friedman's opposition to conscription and fixed exchange rates were considered radical and ideological once.
I think ideology is at its most problematic when it leads to people having preferences over policies, as distinct from outcomes. I'm sure we've all come across people who seemed to care more about public schools (or vouchers) than they care about educational outcomes. Without wanting to be the squishy moderate here, I can't help but feeling that the best approach is to have an ideology, but leaven it heavily with pragmatism.
The bond market's current reaction (or lack thereof) to the approaching debt limit expiry is the product of two separate probability estimates: 1) The probability of default and 2) the implications of default. If the bond markets think 1 is small, it doesn't matter if 2 is large.
That's my take on the bond markets - they're predicting that a deal will be struck in time. The Republicans have nothing to gain from a default, any more than the Democrats do.
Here's the thing, bond markets aren't stupid. If you inflate your currency that will pay your current debts, but subsequent debt will be charged at a higher interest rate to account for the inflation. Or, if you go really nuts with inflation, people will start denominating your debt in another currency; most countries don't get to borrow in their own currency.
It's true that default doesn't mean never borrowing again, but your credit rating won't recover quickly. That means debt is going to be a lot more expensive for the US for quite some item after default.
*Comment archive for non-registered commenters assembled by email address as provided.
On “Neoliberalism and the Left”
I was probably a little scattered, that's what happens when I write a post at 9:30 on a Sunday night. I mean to focus on the US experience with most of what I write, since I know more about US politics than any country besides my own, and I have to be careful about discussing New Zealand politics (plus I know most of you guys are Americans). But I should have been clearer here.
I know unions have been waning in New Zealand; there are two unions of significance still in New Zealand, the Post Primary Teachers' Association (note - a public sector union) and the Engineering, Printing and Manufacturer's Union (which has close political linkages to New Zealand's major left-wing party). I understand this is true pretty much everywhere in the West, though the degree varies from country to country.
"
No, I think you can be justifiably upset about that.
This I'm not so sure about. I think the middle class has stagnated due to your with health care system, I'll write a post about it some time. In any case the bottom 90% of people almost certainly contains the median voter, which makes me leery of any explanation relying on disenfranchisement.
"
I believe that the end of history will only come when the last proton in the universe finally decays.
I'm thinking more of punctuated equilibrium - a big event shakes up existing political coalitions, which then settle into a new equilibrium. Neoliberalism is the left settling into a new equilibrium after the fall of socialism, eventually things will be shaken up anew.
On “Nationalism”
You know, what I find interesting is that a bunch of innocent people are killed by some lunatic in another country and what you immediately think of is how this affects partisan politics in the US.
There are a lot of unpleasant stereotypes about Americans that float around. One of them is that you're provincial to the point of narcissism. The stereotype would have it that Americans are incapable of thinking of the rest of the world as actual places, but are just a backdrop to your country with no other relevance. To give you an example, one of my colleagues has this posted up by her desk. The stereotype is common enough that everyone gets the joke.
Now I happen to think that this attitude to Americans is unfair in general, and yet you are displaying that exact attitude here. Could it be that one crazy Norwegian is reacting to political factors in Norway that have nothing to do with the US? Surely not, that would imply the US isn't the centre of the world. Obviously the Tea Party is to blame! The fact they're already your political opponents is nothing more than an indication of how morally pure you are. You always new people who disagreed with you are evil, and now you have proof!
Don't concern yourself with the fact that conservatism is an ideology that by its very nature is idiosyncratic to the culture in which it exists, that sort of detail will just get in the way of your point scoring.
On behalf of the rest of the planet - grow the fish up.
On “On Neoliberalism”
While I was at university I actually read a paper that discussed the WTO's approach to these cases. The WTO's attitude is that the rules have to be consistent - you can't impose harsher standards on foreign goods than domestic ones. Disparate impact is not a problem, avoiding WTO sanction is as simple as using the same rules for foreign and domestic goods, and applying the rules consistently.
Also, if the WTO finds against you for inconsistency, you can avoid sanction by bringing your environmental laws into line.
I don't see how these requirements could be problematic.
"
A very interesting piece Erik (and yours as well Elias). I'll put up a reply of my own over the weekend.
"
If every other country jumped off a bridge, would you do it too?
"
You are mistaken, WTO rules allow trade restrictions for environmental and health reasons. All a country needs to do is A) show scientific evidence of a threat B) subject domestic and imported goods to the same restrictions. All WTO rules stop you from doing is engaging in protectionism while using the environment as an excuse.
On “Liberaltarianism and mutual improvement”
I'm not sure what your comment means. Those people aren't unemployed because of trade, so I'm not sure what they have to do with anything.
"
I think a carbon tax could only work with international cooperation, otherwise you just end up moving carbon emissions around the world, which is pointless at best, and may be perverse. I agree that it is doomed because of this.
I agree. This is where I think policy attention needs to be focused, there are significant political barriers to nuclear fission. I think solar has potential as well, but only time will tell on that one.
A good point, but like any economist I think at the margin. Every bit helps.
"
Ah, we're talking realpolitik, that's different.
As a practical measure I don't actually support carbon taxation (I know I used it as an example above, but I was more interested in the general principle than this specific example). Though my objection is more about the fact that there's no way in hell we're ever going to get enough countries to sign up for it.
So that leaves us with second-best solutions, and there my thinking is similar to yours. We need to replace coal as a power source. Right now, nuclear fission is the only thing that fits the bill (right now), and the current international moves away from it in Europe are disquieting. But new technologies would be welcome as well, and I can see a role for government there (ideally through contestable prize funds).
"
New Zealand has eliminated nearly all of its tariffs and all of its export subsidies. We must be just about one of the only countries on earth that runs an unprotected agricultural industry.
"
It's definitely true that the gains exceed the losses with free trade.
As to decimating local industries, most of the countries we're talking about have little or no local industry - that's why the labour there is so cheap. And opening trade will shift the patterns of production, some current activates will shrink or disappear, while others rise up. So yes, some industries may well disappear, but the overall effect will be jobs with higher productivity, which means higher pay.
As for actually existing trade policy in the US, most US trade agreements seem to be more about getting countries to adhere to the US's specific take on intellectual property than anything else. also, they often include so many exceptions they are practically useless. I'm less familiar with NAFTA, but mos of the agreements the US tries to close in the Asia-Pacific region are somewhat dubious.
"
In basic terms, the extent to which capital and labour gain or lose from freer trade depends on two things: relative abundance and specificity (or how easily a resource can be turned to other uses).
In layman's terms: in capital-rich countries profits rise and wages fall in response to liberalising trade, in a capital poor-country (like anywhere in the 3rd world), the reverse is true. The reasons for this are technical, but it comes down to the general principle that the more of something there is, the less it is worth (all things being equal). If a country restricts trade with the outside world, then all that matters is how abundant or scare it is in that country. But when you open trade up, what matters is how abundant or scarce something is in the whole world. This is borne out by the fact 3rd world sweatshops actually pay significantly more than the alternative sources of employment (which are generally pretty dismal - subsistence farming, prostitution and picking through polluted landfills are the most common alternatives, even for the children)
But that's only part of the story. Workers (and shareholders) consume as well as produce, and free trade drives down prices. So if you're a first world worker, your income is likely to fall but prices will also fall, so the real question is which effect is bigger? That depends on how easily you can turn your hand to another line of work. If you are equally productive in some other line of work then you can just change industry. However, if your current line of work is the only thing you're good at you have a problem.
Does that help?
"
Sure, no problem.
"
I don't think its as complicated as all that. You identify the major sources of CO2 (coal, petroleum products, I'm sure there are others), you tax them in proportion to the amount of CO2 they emit upon being burned, and you tax them at the point of extraction / importation (unless the imported stuff has already paid a carbon tax in another country).
There's some work involved, but it's not that hard really.
"
But if they were given a guaranteed minimum income and still neglected their children - taking action against them would be more defensible.
"
Except that the US is very efficient at turning CO2 into GDP. If the US taxes its carbon emissions and other countries do not then carbon-intensive industries will tend to move to other countries. This may perversely end up increasing CO2 emissions worldwide, and with CO2 it doesn't matter where the emissions occur - the global effect is pretty much the same.
That's why a global agreement is necessary.
"
I can see where your coming from, but my essential point is that you can't expect all (or even most) of the human suffering generated by poverty to be automatically met by charity. Therefore, you can't just use private charity as a rejoinder to the question "if you abolish welfare, what will become of the poor?"
"
Actually one of the advantages of emissions taxation is it uses market forces to mediate those questions. If a pollution source is valuable, and hard to replace people will just eat the tax, but if it can be replaced it will be. Also, the higher prices encourage innovation to improve efficiency or replace the pollutant.
"
Ironically, I actually have to back-track a little on carbon taxes specifically, since I don't think they'll work due to the intractable coordination problems involved. Emissions taxation is a good solution, but not when you need to get every country on the planet to join in.
I think we're going to need to fall back on second-best solutions for dealing with climate change.
"
It seems like we already have laws regarding child abuse and neglect.
On “A Defense of Pragmatism”
I think you outline one of the useful contributions of ideology. Perhaps the way to address this is to go up a level (because I'm So Meta, Even This Acronym), and pragmatically evaluate ideology.
It seems to me ideology has the following benefits:
1) it gives you a set of values to work with. A pure pragmatists will also have values, but I think is less likely they will realise they have a specific set of values. I see this most particularly is certain public health activists who see to feel that cracking down on fattening foods and smoking is self-evidently good because they don't seem to be counting the consumption benefits of these goods.
2) Ideologues are of the a useful source of outside-the-box thinking. After all, Friedman's opposition to conscription and fixed exchange rates were considered radical and ideological once.
I think ideology is at its most problematic when it leads to people having preferences over policies, as distinct from outcomes. I'm sure we've all come across people who seemed to care more about public schools (or vouchers) than they care about educational outcomes. Without wanting to be the squishy moderate here, I can't help but feeling that the best approach is to have an ideology, but leaven it heavily with pragmatism.
On “Occasional Notes: Allaying Fears Edition”
The bond market's current reaction (or lack thereof) to the approaching debt limit expiry is the product of two separate probability estimates: 1) The probability of default and 2) the implications of default. If the bond markets think 1 is small, it doesn't matter if 2 is large.
That's my take on the bond markets - they're predicting that a deal will be struck in time. The Republicans have nothing to gain from a default, any more than the Democrats do.
"
Here's the thing, bond markets aren't stupid. If you inflate your currency that will pay your current debts, but subsequent debt will be charged at a higher interest rate to account for the inflation. Or, if you go really nuts with inflation, people will start denominating your debt in another currency; most countries don't get to borrow in their own currency.
It's true that default doesn't mean never borrowing again, but your credit rating won't recover quickly. That means debt is going to be a lot more expensive for the US for quite some item after default.
*Comment archive for non-registered commenters assembled by email address as provided.