Globalization


A. Barton Hinkle:

Last weekend, president Nicolas Maduro used a sham election to consolidate power, and by Tuesday armed thugs were rounding up opposition leaders. This is the all but inevitable outcome of the Venezuelan government’s economic policies, which have driven the richest nation in Latin America — a country with more oil than Saudi Arabia — into shocking destitution.

And Darío Paya, former Chilean ambassador to the Organization of American States:

“Populists and socialists destroy their societies in predictable ways. It’s not like one day a populist gets up and says, ‘I’m going to ruin this country.’ Rather, he starts out wanting to spread the wealth and finds that the easiest way to hand out cash is by simply printing lots of it. Which creates a new problem: As the currency weakens, prices rise. But the populist finds there’s an answer for that too. If bread is getting expensive, he can fix its price, and he gets to vilify the baker as a greedy capitalist.

 

“But then the baker stops producing bread because he can’t afford to make it, what with the rising price of flour. And so what does the populist do next? He fixes the prices of flour. When that doesn’t work, the politically expedient thing to do will be to take over the bakery and the farms and hand them to the folks in the party’s local committees, who prove to be rather less apt at farming and baking. …

 

“And if violence does erupt, it can be denounced as the doing of enemies of the state and used as a pretext for renewed crackdowns: ‘We’re going to tell the imperialism and the international right that the people are present, with their farm instruments in one hand and a gun in the other,’ Maduro told a Caracas crowd. And soon, Mr. Populist finds himself with a good reason to suspend the country’s constitution. Thus does a tyrannical attitude toward the shop-owner selling bread lead to a tyranny over a whole nation.”

 

 

 

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Global economic freedom increased slightly in this year’s report to 6.85. Hong Kong and Singapore retain the top two positions with a score of 9.03 and 8.71 out of 10, respectively. The rest of this year’s top scores are New Zealand, 8.35; Switzerland, 8.25; Canada, Georgia, Ireland, Mauritius, and the United Arab Emirates at 7.98; and Australia and the United Kingdom at 7.93.

The United States, once considered a bastion of economic freedom, ranks 16th for a second consecutive year with a score of 7.75. Due to a weakening rule of law, increasing regulation, and the ramifications of wars on terrorism and drugs, the United States has seen its economic freedom score plummet in recent years, compared to 2000 when it ranked second globally.

Here.

 

In the US, Libertarian party presidential candidate Gary Johnson and his running mate Bill Weld are hewing to a centrist message of socially liberal and fiscally conservative. Walter Olson has a piece here. Check this for the next section of this post.

In Europe liberal parties, often seen as the nearest analogue of libertarian, are often perceived in just this way as occupying centrist/middle positions between labor or revolutionary parties on the left and blood-and-soil or religious parties on the right. European liberal tendencies vary but often they’re secular, business oriented, pro-trade, modern, internationalist but not militarist, and interested in meliorist reform rather than street politics or national crusades. Sound familiar?

 

In France, Economy Minister Emmanuel Macron is described in the video towards the bottom of this piece as a social and economic liberal (in the classical meaning of the word, not the statist, corrupted meaning in the US.

French Economy Minister Emmanuel Macron has resigned from the government ahead of an expected centrist bid for the presidency in next year’s election.

 

Mary Anastasia O’Grady in the WSJ on Trump’s bashing of trade with Mexico:

Exhibit A is his promise to shred the North American Free Trade Agreement (Nafta) on the grounds that Mexico, his favorite bête noire, is stealing American jobs. It is technology, not free trade, that is behind the shrinking number of U.S. manufacturing jobs.

Beating Nafta like a piñata worked in the Republican primary. But it is likely to hurt Mr. Trump and GOP candidates further down the ticket in the general election. Mexico is, after all, the U.S.’s third-largest trading partner and second-largest export market.

. . .

Indiana, the home of GOP vice-presidential candidate Gov. Mike Pence, exported some $4.8 billion of goods to Mexico in 2015, making it the state’s second-largest export market.

. . .

Exports to Mexico were over $1 billion in 31 states in 2015. It’s the largest export market for California, Arizona, New Mexico and Texas. It ranks second for 25 other states.

. . .

Trade wars will also damage U.S. competitiveness. As former Mexican deputy trade minister Luis de la Calle explained in a conference call to investors in New York earlier this month, Carrier Corp.’s production move to Mexico from Indiana—much-assailed by Mr. Trump—means that the company can survive Asian competition and can retain U.S. jobs in research, development, marketing and high-end components.

. . .

Mr. Irwin cites a study by the Center for Business and Economic Research at Ball State University, which “found that productivity growth accounted for more than 85 percent of the job loss in manufacturing between 2000 and 2010, a period when employment in that sector fell by 5.6 million.” This 85% compares, according to the study, with 13% of job losses attributed to trade during the same period.

. . .

It is “high-education” and “low-education” jobs—requiring “interpersonal interaction, flexibility, adaptability and problem solving”—that are most difficult to automate Mr. Autor notes. Traditional middle-education jobs have been the easiest to replace with technology.

Whoops, the unintended consequences. This same problem goes for Hillary Clinton and any other critic of trade.

I wondered what “competitiveness” meant. The above quote contains an example.

Not a neat situation that lends itself to a government program.

Behind firewall here.

The Christian Science Monitor:

The canal will reduce the voyage time from the US Gulf Coast to 20 days, down from 34 days around Africa or 31 days through the Suez canal. The new route will also reduce travel time to Chile from 20 days to eight or nine days and to Colombia and Ecuador from 25 to five days, according to the Energy Information Administration. Transportation costs will also decrease through the canal with a new system that encourages LNG traffic.

There’s more to it. Also, given the ingenuity of free enterprise, there’ll be other uses that are unknown at this time.

Here.

This post explains how we have all grown richer from trade. It corrects some fallacies that are prevalent among people who do not understand that trade — with your grocer down the street or a car maker in Korea — is a positive-sum result. Both sides benefit; you gave someone money and in return you received groceries or a car.

Analyst Chelsea explains it better. Here.

My view is the main problem is the political class — politicians, bureaucrats — have distorted the give-and-take of the economy that it does not work correctly. In other words, they broke it.

As of June 26, 2016, the expansion of the Panama Canal is complete and open for business.

Here.

 

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