Re: THE GAME OF GO AND THE CHINESE WAY OF WAR
OK, I'll bite. Isn't go a Japanese game? There were many articles written around the time of WWII on what this game might tell us about Japanese military strategy. China had a version of chess that was much slower and more deliberate than what we know in the west -- a "river" runs through the board, etc. Peter (who played go for a while, but found it too complicated and settled for chess instead) Michael Perelman wrote: Didn't Mao write about Go? On Wed, Jul 07, 2004 at 02:32:26PM -0400, Funke Jayson J wrote: THE GAME OF GO AND THE CHINESE WAY OF WAR A close study of the Chinese board game "go" can provide insights into the distinctive Chinese conception of warfighting, according to a new study published by the Army War College. Go is the oldest board game in the world. With its emphasis on fluidity and long-term strategy, author David Lai says, it differs from chess (absolute conquest), poker (bluffing and risk-taking), boxing (force on force) and football. Go players compete, using black and white stones on multiple fronts, to encircle territory on the board, penetrating the other's territory in a dynamic contest that embodies principles articulated by Sun Tzu in his "Art of War." "A little knowledge and experience of the game of go will be a valuable addition to the American political and military wisdom; and it will take U.S. political and military leaders a long way in understanding the Chinese way of war and diplomacy." See "Learning From the Stones: A Go Approach to Mastering China's Strategic Concept, Shi," by David Lai, U.S. Army War College, May 2004: http://www.fas.org/man/eprint/lai.pdf Jayson Funke -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail michael at ecst.csuchico.edu
ignorance
From an article in today's New York Times, Europe Reluctantly Deciding It Has Less Time for Time Off: To be sure, Europe's dogged pursuit of free time goes on. Sweden is undertaking a two-year study of the social effects of a 30-hour workweek proving that Thorstein Veblen and his theories about the leisure class still exert a bigger pull on the European imagination than Adam Smith does. Would such screaming ignorance of major intellectual figures be acceptable in any field other than economics? (And for one of them, based just on the title of a book, no less) Peter
Re: Bush's rapid shifting of position
A significant constituency on the left has materialized in recent years, propelled by anti- (alter-) globalization actions, mobilizations against the Iraq war, etc. This demographic has been discovered by the entertainment industry, which is ready to sell to them. To say this is not to denigrate the work of Moore et al., but to explain why it is being promoted in the mainstream. Still recommended after all these years: The Consciousness Industry by Hans Magnus Enzensberger. Peter Perelman, Michael wrote: I cannot remember a time with so many left documentaries getting screen time -- even ignoring Michael Moore. Supersize this, control room, the corporation Maybe our time is coming. And then, maybe not. Michael
Re: Marxist Fianancial Advice
I did a brief review of this lit for a paper I wrote recently. Some comments: 1. If market efficiency has any substantive relationship to real factors (as revealed ex post), unpredictability of price movements is necessary but not sufficient for efficiency. 2. The only defensible claim about financial markets is that they are unpredictable in the their first moment (directionality). Schiller et al., as well as common sense, suggest that the higher moments (overshooting) are predictable. This is just another way of saying that an informed observer (like Doug) can tell you when the market is over- or undervalued (with better than 50% probability) but not when to get out or in. 3. If people make consistent errors of judgment (there is lots of evidence that they do), today's price could always be the best estimator of tomorrow's and yet the market would be inefficient according to some objective standard. In other words, both today's price and tomorrow's can be irrational. None of this is very profound, but sometimes the semantics of this topic obscures the more-or-less simple underlying concepts. Peter Doug Henwood wrote: Devine, James wrote: BTW, the stock market is basically unpredictable _even though_ it doesn't fit the efficient markets hypothesis. Again, I must turn into a pedant and ask just what you mean by that. There are several forms of the EMH. Quoting myself from Wall Street, characterizing Eugene Fama's review: Fama distinguished among three varieties of the EMH: the weak, semi-strong, and strong forms. The weak form asserts that the past course of security prices says nothing about their future meanderings. The semi-strong form asserts that security prices adjust almost instantaneously to significant news (profits announcements, dividend changes, etc.). And the strong form asserts that there is no such thing as a hidden cadre of smart money investors who enjoy privileged access to information that isn't reflected in public market prices. This isn't entirely nonsense, is it? Would you argue that stock prices don't adjust almost instantaneously to fresh news? Would you argue that there isn't a strong element of randomness in prices? If you say the market is basically unpredictable, then you're subscribing to at least part of the EMH. The anomalies that have been identified over the years - that low P/E stocks outperform high P/E ones, for example - imply that stocks are, at least to some degree, predictable. The same with Shiller's work on overreaction, which implies that speculators who bet against extremes of mob psychology (which is essentially the strategy of both Keynes and Soros) are part of a smart money cadre that aren't trading on the basis of nonpublic information, but on an unpopular analysis. You could say that the market efficiently reflets the often nonsensical consensus of investors, which is something EMH types wouldn't agree with. Even some dissidents have a problem with irrationality. The first time I met Joseph Stiglitz was late in the dot.com mania. I was very curious to hear his analysis of that lunacy. But his info theory still holds that investors are rational, just not all equally informed. So he wondered aloud, Why do people buy those stocks? Doug
Re: Economists barred from court?
This is also an example of the consequences of pop philosophy of science. A crude positivism that would have no takers at all among specialists in the field rules the courtroom. But don't worry about economics. All heterodox types will be excluded from the hearing, and the judge will rule that neoclassical doctrine is generally accepted. Not a problem. Peter ps: My bugaboo has been the hedonic value of life literature, which plays a big role these days in policy and litigation, but is, in my opinion, indisputably junk science. Eugene Coyle wrote: This column from the WSJ, 6/27/03 leads to two thoughts. First, the law somehow always gets twisted to favor business over people. Second, I don't see how orthodox economists will be allowed to testify in court if judges are competent. Gene Coyle SCIENCE JOURNAL By SHARON BEGLEY 'Junk Science' Ban Also Keeps Jurors From Sound Evidence Ellen Relkin was sure that junk science played no part in her case. Her client, Lisa Soldo, a healthy mother of a newborn, suffered a massive intracranial hemorrhagic stroke at age 28, soon after starting on a drug prescribed to suppress lactation, and was left severely brain damaged. Ms. Relkin, at attorney with the Manhattan law firm Weitz Luxenberg, thought science showed that this tragedy was no coincidence. At the very least, she figured a jury should hear the evidence. None ever did. Thanks to a landmark Supreme Court decision handed down 10 years ago Saturday, science in the courtroom has undergone a radical overhaul. True, some very bad science has been kept out. Says Jerome Kassirer, former editor of the New England Journal of Medicine, It was pitiful how people with few credentials, who made a career out of courtroom testimony, were hired to be expert witnesses. That's much rarer now. But legitimate scientific evidence has also become rarer. Judges are dismissing testimony by physicians as anecdotal, setting standards for scientific evidence higher than what doctors and researchers use, and barring testimony when scientists in different disciplines disagree. In some cases backed by legitimate science, science-and-law scholars told me, judges have ruled that the evidence wasn't good enough, or unambiguous enough, for a jury to hear, and so have dismissed the case before trial. Plaintiff attorneys deplore the situation, while corporate lawyers generally applaud it. The surprise is how few saw it coming. In its 7-2 decision in Daubert v. Merrell Dow Pharmaceuticals Inc., the Supreme Court ruled that, to be admissible, expert testimony must be based on a testable theory or method that had passed peer review, had a known error rate and standards, and reflected generally acceptable science. It instructed judges to be gatekeepers, barring testimony that falls short. At the time, the ruling was seen as a blow to business, as it rejected a strict standard that kept dubious scientific evidence out of the courts, reported this newspaper. As a matter of law, Daubert applies to civil and criminal cases. But few criminal defendants can afford a pretrial Daubert challenge to expert testimony, says Margaret Berger of Brooklyn Law School. So faulty science still finds its way into criminal cases. Example: Prosecutions in some child sexual-abuse cases still rely on therapist interviews that can be badgering and suggestive, which produce misinformation. The real impact has been in civil cases involving claims of harm from a pharmaceutical or other chemical. In these cases, some judges have ruled that without epidemiological studies, plaintiffs cannot prove causation. Others have ruled that doctors' testimony -- that a patient developed heart trouble after taking a drug, got better after stopping it and relapsed after going back on it -- doesn't pass Daubert muster. That, says Dr. Kassirer, shows ignorance of how science works: In medicine, we make judgments about cause and effect based on all kinds of evidence -- biological plausibility, physiology, animal studies and case reports. There are many valid ways to assess causality; this kind of information ought to go to a jury. Several judges have thrown out cases in which epidemiology fails to find a twofold increase in risk from the chemical at issue, even though journals publish papers that take seriously risks below this arbitrary cutoff. Others have found inadmissible models commonly used by scientists to assess exposure. Some judges see scientific disagreement as proof the science is unreliable. That's what Ms. Relkin faced in her Parlodel case. In 1994, with many young women on the drug having had heart attacks, strokes or seizures, and under pressure from the FDA, Sandoz (now part of Novartis) stopped selling Parlodel as a lactation suppressant. Soon after receiving the case in 1998, a Pennsylvania judge empanelled three independent experts to assess the reliability of the scientific evidence on Parlodel. They split. The pharmacologist said the science was sound; the
Re: Monbiot on the WTO
There are two aspects to the WTO power structure that lead it to deviate from even a moderately acceptable level of democracy. The first has to do with the behind-the-scenes manipulation, which Patrick referred to. It is only formally a one-country, one-vote institution. The second has to do with the role of the WTO in imposing the interests of some sectors of each member country's ruling class on the rest. This is the part that gets modeled in all those formulaic political economy of free trade papers. Those who own or run particular industries often have their own desired trade barriers; the WTO, in principle, exists to lean against them in order to reduce trade barriers generally. In practice, this has been highly uneven, with much more protection permitted in some sectors than others. But the main point is that the WTO serves as a quid pro quo mechanism for the market access folks everywhere: your country must accord market access here in order to get market access there. And market access reflects one set of political interests among many. What demonstrators have been demonstrating against is the steady push, utilizing the WTO as a vehicle, for the market access interests of those who profit from exports in every country against all the other social/economic/environmental interests that conflict with them. By its very nature, the WTO is a club to be used against democracy. I agree, however, that there are many levels of hell, and the IMF occupies a rung that makes the WTO's look like, well, Lake Geneva (where it actually sits). Peter Doug Henwood wrote: Peter Dorman wrote: rgely powerless. It benefits from the importance of being unimportant. The WTO is fatally flawed because it rests on the foundation of trade ministers, the designated corporate gofers within any government. On top of that, it is the product (as are all really important international organizations, unlike the ILO, UNESCO, etc.) of global power imbalances. Yes, but...it is a one country, one vote institution, and as Bhagwati argues, for that reason, not a favored instrument of the U.S. or the other G7 countries. Its entire budget, as he pointed out, is smaller than the IMF's travel budget. Unlike the IMF, though, it's ruled against the U.S. It seems to me less dangerous than the Bretton Woods Institutions. Doug
Re: Monbiot on the WTO
Here are some thoughts on Monbiot and some of the pen-l responses. 1. I think Monbiot came to the right answer, but mostly for the wrong reasons. He is in grave danger of falling in with Oxfam and other internationally minded NGOs who have bought into the notion that what poor countries most need is unfettered access to rich country markets. From there it is one short step to signing on to the Cairnes group, etc. He hasn't looked deeply enough into *why* poor countries are so desperate for export markets. In other words, he hasn't incorporated an understanding of the post-debt-crisis financial framework into his analyis of trade. He is quite right to argue for a transformation of poor countries from resource to industrial exporters, but this makes sense developmentally only in terms of a coherent domestic transformation on all levels: domestic markets, domestic capabilities, etc. If industrialization serves mainly as an export-directed phenomenon, bereft of local linkages, for the purposes of servicing debt, then free trade in such products is part of the problem, not the solution. 2. Obviously (to me anyway), if the gross financial and trade imbalances need to be fixed, and if some unspecified debt reduction and capital flow regulatory framework is the answer on the finance side, then an international organization that coordinates trade balances -- keeps them within acceptable bands that have been openly negotiated -- is the answer on the goods and services side. In my make-believe world, this is above all what the WTO would be doing. 3. The institutional problem of environmental and social standards is huge. The ILO (which I will be working for once again over the summer) is admirable in many ways, but only because it is largely powerless. It benefits from the importance of being unimportant. The WTO is fatally flawed because it rests on the foundation of trade ministers, the designated corporate gofers within any government. On top of that, it is the product (as are all really important international organizations, unlike the ILO, UNESCO, etc.) of global power imbalances. I cannot begin to imagine anything good coming from this organization under these circumstances. The sort of democratic and accountable global governance we need will require much more radical changes at the national level in the US and other great power countries. In the meantime, I believe there is lots of unutilized potential for creating shadow institutions (paralleling the WTO, IMF etc.) from below, based on hard-nosed negotiation between groups representing democratic interests in different countries. To really be effective, these alternative groups would have to actually take concrete positions on specific issues as they arise; i.e. they would have to cooperate on a detailed program and not just on their opposition to the status quo. This is something effective political groups have always done on a local and national level; now global capitalism has forced the same necessity on us internationally. 4. In the end, I think there really is a case for substantial relocalization, but it should be the result of a sane trading framework, not an imperative imposed on it. Once the debt treadmill is smashed, and once the false economies based on hyper-exploitation of populations and resources are ended, most of the impetus for destructive trade will cease. Then it will be enough to build up healthy local economies on their own merits, through the methods some communities are beginning to pioneer. I apologize for the soapbox tone of this e-mail. I guess I must be pretty opinionated about this stuff. Peter
Re: 'Straussians' in the news; the world trembles (II)
Actually, I bring a Dewey perspective to questions relating to democracy. Virtue is not something people simply have, nor is it likely to be the product of cloistered study. Ordinary, somewhat virtuous people can produce more or less beneficial social groups depending on the ways they constitute themselves. The conflation of individual and social qualities appears to be a key theoretical failing of the Straussians. Worse, they (or at least the ones I have known) have fallen into the trap of implicit superiority: because they pronounce on the virtue of others, they are above such considerations. There is a history of some Marxists falling into a similar trap with respect to false consciousness. (I who am in a position to judge who is subject to false consciousness am therefore free of such delusions.) All versions of the ubermensch mindset are profoundly dangerous. Incidentally, the reason classics have been studied for centuries is that people have found contemporary relevance in them. You don't think, for instance, that Martha Nussbaum (to take just one prominent example) finds contemporary meaning in the ancient Greeks? Strauss' claim to fame is his contention that all those ancient texts were written in code, and that he was the first to recognize this and divine their true meaning. Peter David S. Shemano wrote: In addition to this list, I receive the Strauss list, which is maintained at Yahoo Groups. I have also read quite a bit of Strauss. Strauss took Marx very seriously as a philosopher. One of his books, On Tyranny, contains an exchange of letters with Alexandre Kojeve regarding, among other things, the progression of history (Fukuyama's End of History is in many ways a popularization of this exchange). The Marx chapter in the Strauss edited History of Political Philosophy is also very respectful. Strauss's major accomplishment, to me at least, was to successfully argue that ancient philosophy had more than historical relevance. In other words, Strauss attacked the historicist notion that there is no point to studying the ancients for the truth of their arguments because we come after them and, therefore, know more than them, or that because they lived in an ancient slave society, they could not possible have anything important to say to us living in a technologically advanced capitalist society. Therefore, if a serious Straussian questions political democracy, it is not pop-Nietzche, but following the ancients in asking Who Should Rule? as a fundamental question of political philosophy, and the ancients had very critical things to say about political democracy. This is not to say that (all) Straussians necessarily agree with those criticisms, but that Straussians believe those criticisms must be taken seriously and cannot be dismissed a priori, because there is the possibility that those criticisms are correct. As the Straussian conspiracy apparently controls the White House, I would encourage anyone interested to join the Strauss list to know thine enemy and bring a Marxist perspective to the various topics discussed. David Shemano
Re: 'Straussians' in the news; the world trembles (II)
To follow up on Jim's fourth point, networks are very important in staffing political positions. There are many social networks out there, most of them invisible to those on the outside. When a new administration takes power, it relies on the networks it's tied into for recruitment. This is unavoidable; there is no other way to identify people who are not only ideologically but also personally compatible with the new management team. The Straussians have provided one such network for the Bushies. (They have also drawn on the Kissinger clique, the Bush/Rove Texas mafia and many other networks.) Why the sudden attention given to the Strauss crew? Certainly the oddness of an academic faction based on the study of classics is part of the story, but also the legendary cynicism and corruption of this crowd is relevant. (Remember all the publicity surrounding Bellow's book about Bloom?) It would be a mistake, however, to attribute too much importance to this one influence. As far as I can tell, the Bush administration is less ideas-driven than most, and that's saying a lot. Peter Devine, James wrote: three points: 1. It's important to distinguish Strauss from the Straussians. (Similarly, Marx is quite different from the Marxians, while Friedman is different from the Friedmaniacs, though not much.) Strauss was a scholar who came up with a lot of scholarly interpretations, many of which were controversial, whereas (as I understand it) many of the Straussians share a culture of elitism and secretiveness. It should be mentioned that they are far from the only ones who are elitist and secretive. BTW, those kind of attitudes have been shared by various left groupings at times.For example, as noted in an article from the NY-based Jewish daily FORWARD that was posted to pen-l awhile back, some of the "neo-conservatives" were once (marginally) on the left, associated with the Social Democrats, USA, an elitist and secretive (i.e., sectarian) grouping. 2.Strauss andStraussians have nothing close to a monopoly on respect for ancient philosophers. I work at a Jesuit-sponsored university where the philosophy department puts a big emphasis on the importance of ancient philosophy (while rejecting the modernist view that new philosophy has superceded the old). However, as far as I know, there are no Straussians in the department. (I'll ask.) 3. No one on this list, as far as I know,believes in any kind of Straussian conspiracy. Instead, I'd guess that the consensus is either that (1) the Straussians are unimportant or (2) Straussians and Straussianism simply provide an ideological cover (in certain circles) for what the Bush administration would do anyway, based on the various vested interest groups (fractions of the capitalist class) that the administration represents and their strategy ofcreating a permanent lock on governmental power for their clique. BTW, I haven't seen it noted that a lot of Straussians flocked to Washington to serve the Reagan administration. They are like that, servants to power, when that power is very "conservative" (i.e., overtly and strenuously serving the rich). Jim Devine [EMAIL PROTECTED] http://bellarmine.lmu.edu/~jdevine -Original Message- From: David S. Shemano [mailto:[EMAIL PROTECTED]] Sent: Wednesday, June 18, 2003 9:46 AM To: [EMAIL PROTECTED] Subject: Re: [PEN-L] 'Straussians' in the news; the world trembles (II) In addition to this list, I receivethe Strauss list, which is maintained at Yahoo Groups. I have also read quite a bit of Strauss. Strauss took Marx very seriously as a philosopher. One of his books, On Tyranny, contains an exchange of letters with Alexandre Kojeve regarding, among other things,the progression of history (Fukuyama's End of History is in many ways a popularization of this exchange). The Marx chapter in the Strauss edited History of Political Philosophy is also very respectful. Strauss's major accomplishment, to me at least,was to successfully argue that ancient philosophy had more than historical relevance. In other words, Strauss attacked the historicist notion that there is no point to studying the ancients for the truth of their arguments because we come after them and, therefore, know more than them, or that because they lived in an ancient slave society, they could not possible have anything important to say to us living in a technologically advanced capitalist society. Therefore, if a serious Straussian questions political democracy, it is not pop-Nietzche, but following the ancients in asking "Who Should Rule?" as a fundamental question of political philosophy, and the ancients had very critical things to say about political democracy. This is not to say that(all) Straussians necessarily agree with those criticisms, but that Straussians believe those criticisms must be taken seriously and cannot be dismissed a
Re: WTO--hypocrisy, yada yada yada
How can this absurdity be peddled so openly and repeatedly? EU ag subsidies the biggest single contributor to Third World poverty? Unreal. Peter Ian Murray wrote: The International Herald Tribune | www.iht.com Europe's trade hypocrisy: The West pays to keep the rest poor Philip Bowring IHT Tuesday, June 17, 2003 Europe's trade hypocrisy snip Having missed an opportunity as host of the Group of Eight summit meeting in Evian to lead Europe away from its annual agricultural subsidies of $50 billion - the biggest single contributor to Third World poverty - France is now stitching up the European Union's reform plans.
Re: 'Straussians' in the news; the world trembles (II)
The issue is not what Strauss himself did or did not say. There is a definite culture among contemporary Straussians (divided as they are) that promotes deceit and an ubermensch self-conception among the adepts. It disdains democracy due to the inability of the vast majority to attain, or even comprehend, virtue. It is definitely not a dominant ideology on the right, but it contributes to and justifies the cynicism of rightists in power toward everyday morality. Anyone who has ever had to deal with these people first hand comes away feeling soiled. Peter Kenneth Campbell wrote: 'Straussians' in the news; the world trembles (II) Clifford Orwin National Post Tuesday, June 17, 2003 In yesterday's column I began to address the allegations that a sinister cabal of Straussians dominates American foreign policy and was responsible for the war against Saddam. Many would have you believe that it's a fundamental principle of this sect to practise deceit against non-members the better to rule over them. Central to the Straussian vision is a docile citizenry, kept uninformed and easy to manipulate through perpetual fear of external attack (Linda McQuaig, The Toronto Star, May 25). Not that Ms. McQuaig has ever read a word of Strauss. It's clear from her column that she hasn't. She's just repeating what other leftish journalists have been saying. But where there's so much smoke, there must be fire, right? Well, don't count on warming your hands over it. Yes, a few figures in the Bush administration once took courses with the late Leo Strauss (1899-1973), whose defence of liberal democracy I discussed yesterday. Of these few, however, only one, Deputy Secretary of Defence Paul D. Wolfowitz, is in a position to make policy, and even he is only in a deputy position to make policy. As Peter Berkowitz has pointed out, this whole scenario of a Straussian takeover of the U.S. government is wildly implausible. It supposes that President Bush, Vice-President Cheney, Secretary of State Powell, Secretary of Defence Rumsfeld, and National Security Adviser Rice, non-Straussians by all accounts, are stooges and dupes [of their subordinates]. It's also worth noting that of the supposed Straussians in the administration, Wolfowitz, by far the most influential, is also the least a Straussian. A student of math and science as an undergraduate, he switched to national security studies. While he did take a couple of courses with Strauss, his mentor was the late Albert Wohlstetter, a logician and operations analyst with no connection to Strauss. Wolfowitz is an imposing figure. As even his detractors concede, he combines an incandescent intelligence with great dedication to public service. He has served loyally in five administrations, Democrat and Republican alike. Yes, he has President Bush's ear. He's earned it. But others also have Mr. Bush's ear. Rumours of a coup ( Straussian or otherwise) have been greatly exaggerated. Much of what has appeared in the press is sensationalism pure and simple. I mean not just the accusation that the Bush administration engaged in massive deception in the months prior to the war against Saddam, but the claims that in doing so it was following the teaching of Strauss. The question of whether the administration misled the public, or was itself misled, will doubtless be subject to further scrutiny. It still remains to be shown that it engaged in any deception of anyone. But our present concern is the further assertion that if deception did occur it must have been due to the influence of Strauss. All right, then. Have you ever wondered why politicians aren't completely truthful? Why they always use the truth selectively, in the service of partisan rhetoric, and occasionally misplace it entirely? Well, now you know. They've been corrupted by reading a certain scholar of ancient political philosophy. Well, my goodness, this couldn't have occurred to them on their own, could it? Politicians didn't use to dissemble, did they? As if this weren't dumb enough already, there's another crucial problem with it. There's simply no basis for it in Strauss. When journalists attribute these views to him, they never quote him. They can't. Strauss never argued that democratic leaders should deceive their peoples. The statesmen he admired were ones of impeccable integrity. Yes, Strauss did write about a certain mode of deceit, which he called esoteric writing. Indeed he claimed to have rediscovered this practice after centuries of oblivion. But this kind of prevarication was practised not by rulers on the ruled, but by certain of the ruled on the rulers. Strauss first expounded this theme in his Persecution and the Art of Writing. The art in question was precisely a response to persecution, the resort of the powerless and unconventional (including philosophers, who as such are both of these). It was not a technique of wielding power. A recent example is the Aesopian writing that dissidents practised under Communism.
Re: Hobsbawm on the American Empire
OK, this is for the sake of discussion, since I wouldn't presume to advise UFPJ. First, I think that, just by being who they are, they pose a question to groups involved in economic globalization. If, say, Public Citizen works with UFPJ, they necessarily weaken their ties to corporate protectionists. Second, UFPJ should focus on strengthening democratic, or proto-democratic, multilateralism. So the solution to subsidies and other barriers to trade in agriculture is neither simply more restriction at the national level or, even less, free trade, but working for intenational coordination of subsidies and market controls -- basically resurrecting NIEO (New International Economic Order, a pretty good idea from the 1970s). To the maximum possible extent, this program should be based on the ideas put forward by grass roots farmer and peasant organizations around the world. Managed debt relief (in a big, Jubilee South way) would be another example of this. Strengthening international environment treaties, labor rights etc. In other words, the alternative to neoliberal globalization would not be nationalism but internationalism. That would definitely exclude the Pat Buchanans of this world. How does this sound? Peter Yoshie Furuhashi wrote: This is a difficult question. The global justice movement has, in general, been willing to align itself with old-fashioned protectionist interests in the US. They have more money than we do and more access to media and politicians. Activists recognize that the interests involved are fundamentally opposed, but they have taken this route anyway. We saw this around NAFTA, China/WTO, etc. I have been arguing (to those who will listen to my harangue) that this strategy is a mistake. The political costs outweigh the benefits, IMO. We alienate soft supporters of justice-oriented initiatives who are worried about protectionism; they think that, if liberalization is defeated, the most reactionary business interests will be the ones who pick up the pieces. My view is that every alliance risks a corresponding alienation. You have to decide who you want to reach out to, and who you are willing to write off. As a political matter, I would rather extend myself to hesitant left-liberals than cozy up to a North Carolina textile baron. (And I am very willing to piss off liberals in other contexts...) Peter One of the action priorities that came out of the United for Peace and Justice conference in Chicago (June 6-8, 2003) is as follows: * UFPJ Action Priorities 2) Campaign to Unite the Peace and Global Justice Movement This campaign calls on UFPJ to initiate a comprehensive grassroots educational campaign that makes the links between military and economic empire-building by confronting corporate globalization, the global economic agenda of the ruling elite. The campaign includes coordinated days of action during the Sept. 10-13 WTO meeting in Cancun, including a commemoration of 9/11 and a Global Day of Action Against Mobilization and War on Sept. 13. The campaign also calls for UFPJ to mobilize for the Nov. 19-21 FTAA meeting in Miami and the Nov. 22-23 School of the Americas protest. http://www.unitedforpeace.org/article.php?id=1755 * Suppose, for the sake of discussion, that you are either on the UFPJ steering committee or advising them, helping UFPJ develop a campaign out of the above action priority. What actions, demands, and talking points would you recommend with regard to the Sept. 10-13 WTO meeting in Cancun and the Nov. 19-21 FTAA meeting in Miami? -- Yoshie * Calendars of Events in Columbus: http://www.osu.edu/students/sif/calendar.html, http://www.freepress.org/calendar.php, http://www.cpanews.org/ * Student International Forum: http://www.osu.edu/students/sif/ * Committee for Justice in Palestine: http://www.osudivest.org/ * Al-Awda-Ohio: http://groups.yahoo.com/group/Al-Awda-Ohio * Solidarity: http://solidarity.igc.org/
Re: 'Straussians' in the news; the world trembles (II)
I will admit (actually I said it in an earlier e-mail) that my knowledge of Straussian mores comes from my own experience and not from any sort of systematic study. It may well be that I encountered an unrepresentative sample, although (1) grad students I talked to who had been dragooned into studying the stuff and had gone to a number of Straussian conferences described the whole scene in similar terms, and (2) it is now being echoed by a number of media people, who presumably heard it from someone (and not me). Even so, I wouldn't expect that every Straussian, everywhere would share these traits. Peter andie nachgeborenen wrote: There's a big range. I had two Straussian teachers in Michigan polisci. One was a liberal feminist, utterly commited to democracy. She didn't blink when I wrote a paper defending what I took to be Lenin's ideal of direct democracy in SR. The other Straussian teacher of mine was very conservative, but absolutely fair and honest, a level-headed, extremely sharp, and scholarly guy. I was the class commie -- in those days I was _very_ Red and out -- and all he insisted was that I argue for my views. (He didn't get tenure.)Gavve me the misimpression that Straussians were just people who read classic texts very carefully. Well, some of them are. Later, I had an experience with the while range of Straussians, speaking at a conference on Marxism at Kenyon College in Ohio. I was on a panel with one fella, in history, I think, who was just like my old teacher, very conservative but smart, decent, and fair. Then there were some clowns from polisci who were touting the sort of scary pop-Nietzschean elitism that is at issue here. I argued that the living essence of Marxism was the extension of democracy to the economy. The historian argued that there was a difference between political and economic democracy, the first being a good and the latter a bad idea -- good in theory, bad in practice. The polisci types said, What's so great about democracy? Excellence requires elite rule. I said that I thought the differences between us were to great to be fruitfully discussed. jks Peter Dorman [EMAIL PROTECTED] wrote: The issue is not what Strauss himself did or did not say. There is a definite culture among contemporary Straussians (divided as they are) that promotes deceit and an ubermensch self-conception among the adepts. It disdains democracy due to the inability of the vast majority to attain, or even comprehend, "virtue". It is definitely not a dominant ideology on the right, but it contributes to and justifies the cynicism of rightists in power toward everyday morality. Anyone who has ever had to deal with these people first hand comes away feeling soiled. Peter Do you Yahoo!? SBC Yahoo! DSL - Now only $29.95 per month!
Re: Empire and Current Account
But I think the idea is not to pay very much for them -- certainly less than they pay for what they get from you. And in capitalist empires there is also the issue of the Keynesian demand constraint. The other question is interesting. Throws a new light on the GNP v GDP business... Peter Ellen Frank wrote: This reminds me of a question I have long had to which one of you out there may have an answer. How did imperial Europe account for trade with colonies in the 1800s? Was Congolese rubber sent to Belgium counted as a Belgian import or was it treated as internal trade within Belgium? I would think the whole point of an empire is to extract resources and labor from one's colonies, not the other way round. Ellen PEN-L list [EMAIL PROTECTED] writes: John Gray (not the author of Men are from Mars) thinks that the really strange thing about the current situation is that the USA is the first empire to be running a structural current account deficit rather than a surplus. I rather think that I agree with him, although I have not checked his assertion that Britain, Spain, Rome etc all exported capital. dd
Re: Hobsbawn on the American Empire
This is a difficult question. The global justice movement has, in general, been willing to align itself with old-fashioned protectionist interests in the US. They have more money than we do and more access to media and politicians. Activists recognize that the interests involved are fundamentally opposed, but they have taken this route anyway. We saw this around NAFTA, China/WTO, etc. I have been arguing (to those who will listen to my harangue) that this strategy is a mistake. The political costs outweigh the benefits, IMO. We alienate soft supporters of justice-oriented initiatives who are worried about protectionism; they think that, if liberalization is defeated, the most reactionary business interests will be the ones who pick up the pieces. My view is that every alliance risks a corresponding alienation. You have to decide who you want to reach out to, and who you are willing to write off. As a political matter, I would rather extend myself to hesitant left-liberals than cozy up to a North Carolina textile baron. (And I am very willing to piss off liberals in other contexts...) Peter Yoshie Furuhashi wrote: June 11, 2003 After Winning the War The Empire Expands Wider and Still Wider By ERIC HOBSBAWM snip But the global empire of Britain, the first industrial nation, worked with the grain of the globalisation that the development of the British economy did so much to advance. The British empire was a system of international trade in which, as industry developed in Britain, it essentially rested on the export of manufactures to less developed countries. In return, Britain became the major market for the world's primary products (2). After it ceased to be the workshop of the world, it became the centre of the globe's financial system. Not so the US economy. That rested on the protection of native industries, in a potentially gigantic market, against outside competition, and this remains a powerful element in US politics. When US industry became globally dominant, free trade suited it as it had suited the British. But one of the weaknesses of the 21st century US empire is that in the industrialised world of today the US economy is no longer as dominant as it was (3). What the US imports in vast quantities are manufactures from the rest of the world, and against this the reaction of both business interests and voters remains protectionist. There is a contradiction between the ideology of a world dominated by US-controlled free trade, and the political interests of important elements inside the US who find themselves weakened by it. What should US leftists do about this contradiction -- the contradiction that has been ignored by the US branch of the so-called global justice movement? -- Yoshie * Calendars of Events in Columbus: http://www.osu.edu/students/sif/calendar.html, http://www.freepress.org/calendar.php, http://www.cpanews.org/ * Student International Forum: http://www.osu.edu/students/sif/ * Committee for Justice in Palestine: http://www.osudivest.org/ * Al-Awda-Ohio: http://groups.yahoo.com/group/Al-Awda-Ohio * Solidarity: http://solidarity.igc.org/
Re: Spreading the cost, legitimizing aggression
The American invasion of Iraq is essentially a hostile takeover -- financing the acquisition of another country by liquidating the latter's assets. Truly government along modern business lines... Peter k hanly wrote: http://www.zmag.org/content/showarticle.cfm?SectionID=15ItemID=3341 Aid Conundrum by Phyllis Bennis; March 28, 2003 snip Should oil-for-food funds be released and used to pay for emergency supplies? No -- international law, specifically Geneva Conventions, requires belligerent --and occupying power -- to take responsibility (meaning pay) for humanitarian needs of civilian population under occupation. Currently that includes most of Iraq. The oil-for-food money is Iraqi money; it belongs to the people of Iraq, and should remain in the bank until there is a functioning government in Iraq to whom it can be turned over. 2) Then how should emergency food, medicine, other needs be paid for? The U.S., the occupying power and belligerent, should pay all costs for emergency care and initial rehabilitation efforts, at least during period while hostilities continue. etc.
Re: Re: The Stalingrad thesis.
I hate to say this -- it's really pretty ugly -- but the reason Baghdad will not be Stalingrad is fairly simple. The US has the power to destroy as much of the city and its inhabitants as it wants. There is no military impediment to this, only the political cost of such slaughter. It comes down to a very cold calculation: how many civilian deaths and visible leveling of the city can they get away with? My guess is that, if Iraqi resistance is stiff, they will aim at the upper end of what they perceive to be the politically feasible range. It sickens me to imagine what this could mean. Peter Michael Perelman wrote: I don't think were talking about Stalingrad here. I suspect it will be more like Jenin, but this means that the US would have a hard time installing a new Karzai. -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail [EMAIL PROTECTED]
Re: Rumsfeld papers over strategic split
FWIW, the Russian GRU report is predicting no operational pause, but a major attack to clear the way to Baghdad within 48 hours. Peter Chris Burford wrote: War tactics split is denied by US http://www.guardian.co.uk/Iraq/Story/0,2763,926226,00.html Ahead of a New Yorker report published today, Monday, America's military and civilian war leaders made an aggressive effort to present a united front yesterday, amid claims that US troops are beginning an enforced pause of days or weeks before advancing on Baghdad. However the British media reported over the weekend very much a picture of Rumsfeld on the defensive. This is the result of Iraqi resistance, and counterattacks by the British government, the US military, and the CIA. The story has been gently amplfied by news sources in London. Saturday's Guardian had a feature on General Shinseki who has been humilated by being sidelined by Rumsfeld by a retirement announced 18 months ahead of its time, although he is officially Tommy Franks superior. It also seemed significant that Richard Myers, as Chair of the Joint Chiefs, the equivalent of Colin Powell's position at the time of the Gulf War, waited to give his first televised interview of the war to the David Frost programme on BBC on Sunday morning. He emphasised that one thing we are using is patience. We can afford to take our time. The US will want us to be patient. He signalled a geopolitical awareness: It is inherent on great powers to use restraint. Three times he praised the British strategy and tactics [I will post separately on this] Clearly he also spoke with the authority of a deal that agreed to double the number of US troops in Iraq, announced shortly after the Bush Blair summit. Later on Sunday he was speaking on US television. Confirmation of the shift in strategy was suggested by the next interview on the Frost programme by the former comander of UK forces at the time of the Gulf War, Sir Peter de la Billiere, very discreet in his style of discourse, who would probably know the thinking of many retired generals with links to the current military on both sides of the Atlantic. He welcomed Myers' s interview as very refreshing and stated military commanders are not going to perform according to the timetable of politicians. He stressed the flexibility of the UK military approach. He also argued for fighting easy rather than fighting hard even if it took six months. By midday London time, the ultra-reliable Foreign Office minister Mike O'Brien, really second to Jack Straw, said We are now in a situation where the politicians are listening very carefully to what the generals, the military are saying. This position was echoed by Peter Hain, another senior minister in the Foreign Office on the commercial channel within an hour. It is clear that there is a coodinated line enthusiastically endorsed by the Brits that the politicians (including quite possibly Rumsfeld) should shut up a bit and let the generals take greater responsibility, and the head of the US Chiefs of Staff is signalling enthusiasm for the UK military strategy and tactics. One of the paradoxes of imperialism is that the military is often more cautious and humane than the imperialist ideologues. Myers is smoothing things over saying the war plan is fine and it works. Rumsfeld is saying the war plan is actually Tommy Franks's, and it works. But yesterday's Sunday Telegraph, which is well-briefed on military affairs had a headline quoting a former National Security Adviser with close links to the White House (!) saying Not everybody wants to be seen too close to Don Rumsfeld right now. You would expect such a mini-revolution in the war plan to need quite a bit of papering over. Not least because it actually reflects a global battle between two imperialist strategies. Meanwhile the surface debate is all about whether there has been a pause. Which is a mere epiphenomenoninherent to any war. Chris Burford London PS No one has yet thought to ask, if the war was going to take six months anyway, with hegemonic troops stuck in an unpleasant desert through the height of summer, why did they have to fall out with France at the Security Council which was seeking a mere 3 months more of inspections?
Re: RE: New Alazeera wesite in English
They've been knocked off the web by what is said to be either a technical problem (underestimating incoming traffic) or a denial-of-service attack. Is there a news update on this? Peter Alan Jacobson wrote: I get a 404 error (server not found) when I try that URL. Alan Jacobson -Original Message- From: [EMAIL PROTECTED] [mailto:[EMAIL PROTECTED] Behalf Of k hanly Sent: Tuesday, March 25, 2003 12:40 PM To: pen Cc: [EMAIL PROTECTED] Subject: [PEN-L:36091] New Alazeera wesite in English The URL is: http://english.aljazeera.net/?tag=nl
Re: RE: RE: Re: Clash of Currencies and the Iraq War
Im just getting back to this thread apologies if Im way behind the flow. Anyway, Krugman is OK as far as he goes. As I mentioned before, the euro-vs-dollar conspiracy crowd is simply wrong on the mechanics of how these things work. Whether oil is denominated in dollars or not is relevant, as K also says. And I doubt that US planners think in terms of the IPE concept of key currencies. If I were sitting in on their planning meetings, I suspect I would hear a lot about leadership, access to [or of] capital, etc. Nevertheless, the US has a persistent current account surplus in excess of half a trillion dollars a year. Robert Blecker, Dean Baker, Jamie Galbraith, Wynn Godley and others have demonstrated, convincingly to me, that this is unsustainable even before the long run comes calling. The relative attractiveness of US asset markets has taken a big hit in the last year or so; hence it is extremely likely that our payments are being balanced by a buildup of external reserves. (Krugman thinks this as well.) That is a dangerous situation. It is also a politically anomalous situation, because it suggests that foreign governments, through their ostensibly autonomous central banks, have increasing leverage over US financial prospects. The advantages of the privileged position of that dollar are not so much the seigniorage that Krugman refers to, as they are the ability to acquire a very large external debt. At some point in the future, this will not look like such a great deal, but right now it means that Americans as a group can enjoy relatively high living standards without have to do the grubby work producing stuff that we or others actually want. To repeat: left economists who specialize in these things should be writing popular pieces discussing the political economic relationship between global finance and war. The best response to faulty analysis is better analysis. Peter Max B. Sawicky wrote: Krugman argues that the issue is a crock: http://www.wws.princeton.edu/~pkrugman/oildollar.html His argument looks right to me. max
Re: Re: Re: US opinion polls
Many thanks, Doug. There is a big difference, but I would have expected more lopsided oppose numbers from those who don't see an Al Qaeda connection. Perhaps a later poll would have revealed this. Peter Doug Henwood wrote: Michael Perelman wrote: Doug Henwood posted data on this to his list. Maybe he could resend them here. There was a striking difference according whether or not people held the evil Saddam responsible for 9-11 or not. On Sat, Mar 22, 2003 at 01:13:07PM -0800, Peter Dorman wrote: The New York Times presented more polling data today. One question that interests me is how opinion is split based on the role of disinformation. Specifically, how do the percentages of those for or against the war differ depending on whether respondents believe that Iraq was responsible for the 9/11 attacks (i.e. conditional probabilities)? Does anyone on this list have this information, either for the present or the recent past? Peter Yes I've posted quite a bit on this. Here's the latest. Other polls tell pretty much the same story. Another stunning factoid: only 17% of US respondents could give the correct number of Iraqis among the 9/11 hijackers (0, of course). Doug [this is from the director of polling for ABC] This except from our 1/28/03 ABC News poll analysis may help. AL QAEDA - Bush's assertion in his speech that Saddam Hussein aids and protects terrorists, including members of Al Qaeda is one that confirms a perception already held by many Americans. Any number of polls since Sept. 11, 2001, have shown that most do think Iraq supports those terrorists; in this survey, 68 percent say so. This perception is an important one in fueling support for military action, in that such support is premised to a large extent on the sense of threat Americans feel from Iraq. Among those who think Iraq directly supports Al Qaeda, 73 percent favor taking military action to oust Saddam. Among those who don't think he supports Al Qaeda, support for military action drops to 45 percent. 9. Do you think Iraq has or has not provided direct support to the Al Qaeda terrorist group? ProvidedNot provided No support support opinion 1/28/0368 17 15 Xtab: Military action vs Iraq Support Oppose Provided support to Al Qaeda (68%) 73% 24 Not provided support (17%) 4551
Re: Clash of Currencies and the Iraq War
I'm both happy and a bit embarrassed at the way this dollar-euro story is being picked up by the antiwar movement. I'm happy because the extreme vulnerability of the US payments situation is crucial to any analysis of the geopolitics of the current moment. Talking about this represents an advance in sophistication and perhaps preparedness for what may come. I'm embarrassed because the analyses that are floating around are highly flawed in their particulars and make it look as though our side is not very together. I think the fault may lie with us lefty economists; we who have been studying this for years should be writing about it, but instead we are leaving it to folks who are trying to figure it out on the fly... Peter Carrol Cox wrote: This article by Geoffrey Heard is one of the better I've seen on the war. This URL takes you to the printer-friendly version. Carrol http://slash.autonomedia.org/print.pl?sid=03/03/20/1330253
US opinion polls
The New York Times presented more polling data today. One question that interests me is how opinion is split based on the role of disinformation. Specifically, how do the percentages of those for or against the war differ depending on whether respondents believe that Iraq was responsible for the 9/11 attacks (i.e. conditional probabilities)? Does anyone on this list have this information, either for the present or the recent past? Peter
Re: RE: Re: Re: quiet... too quiet
While adamant opposition to war remains correct, the left would be in a better position (politically and ethically) if it had consistently supported constructive initiatives on human rights. The suppression of hundreds of millions of people under absolute despotisms, and the oppression of minorities everywhere, are burning issues, and denouncing them is not an adequate response. Just as we organize against war, we should be organizing for institutions to defend human rights. I for one do not think of the International Criminal Court as a distraction or pointless bit of bourgeois puffery. It is far too restricted in scope, of course, but it's our job to put forward a vision of a genuine international human rights court of appeal. Similarly, the international solidarity movement is a prototype of an international peace force -- third parties who could provide on-the-ground protection for people at extreme risk. It should not just be well-healed youth from the richer countries who do this; we need a global fund to finance human rights intervention work by people from third world and low income communities too. These are all elements of the other world that is said to be possible. The big obstacle to overcome on the left is, to put it very bluntly, nationalism. The idea that national sovereignty is a higher principle than human rights has widespread currency, but to me it is a great mistake. Whenever the left has chosen nationalism over internationalism, it has ended in disaster. Nationalism is a bad idea not just for the powerful countries, but also for the dominated. It presents itself as a defender of human and economic rights, but it tramples these rights in order to save them. If we buy into the dichotomy between imperialism and nationalism, we lose. Our chose is between either of those and international solidarity. Sorry for the lecture, but recent events have put me into a soapbox mode. Peter Devine, James wrote: We should help the Iraqi people as they see fit (within reason, of course). One thing that would help is regime change in the US. JD -Original Message- From: Bill Lear To: [EMAIL PROTECTED] Sent: 3/19/2003 4:32 AM Subject: [PEN-L:35742] Re: Re: quiet... too quiet On Tuesday, March 18, 2003 at 19:34:07 (-0800) Devine, James writes: ... In any event, it's for the Iraqi people to overthrow their dictator. It's not _our_ job. It is our responsibility to help them in any way they see fit, if we helped put him there and supported him, is it not? Bill
Martin Feldstein??
I just received an e-mail from ECAAR about the antiwar petition that I and many of you signed. As I scanned the ad copy with the list of names, I was struck by the inclusion of Martin Feldstein. OK, it wasn't exactly Martin Feldstein but Martin Feldstei -- but then I was Peter Dorma. So is it true? Do I have to rethink my position? Peter
Re: quiet... too quiet
I am quiet on this list because I am struggling to catch up with my work after two days of personal devastation following the news about Rachel Corrie. Everyone who was active about anything here in Olympia knew this woman and what she stood for. It is a terrible loss. Peter Devine, James wrote: quiet... too quiet pen-l is very quiet today. Is it because Fatherland Security Minister Tom Ridge has raised the alert level to burnt umber? Jim Devine [EMAIL PROTECTED] http://bellarmine.lmu.edu/~jdevine
Olympia demonstration
We had a spirited turnout on Saturday in Olympia, WA. My own estimate would be about 1500, although the organizers claimed 2500 -- in either case, not bad for a small town, especially since many activists went to Seattle to demonstrate there instead. The crowd was diverse, and it included quite a few vets (several of whom spoke), older folks, etc. I saw several people I recognized as mainstream Democrats. Coverage in the local newspaper was very positive and supportive. The overall mood was definitely we are the mainstream. Speakers ranged from slightly left of center to hard left; there was music, poetry, etc. Incidentally, I was very impressed by the large number of dogs in attendance. This shows the depth of antiwar sentiment, given their long evolutionary history of aggression and pack-oriented behavior. Peter
Re: What is wrong with the mainstream economics?
Mainstream economics can be stretched and bent to deal with many non-mainstream
concerns, but I think there are three conceptual limits and one sociology-of-knowledge
limit.
Conceptual:
1. "Exchange", what markets presumably consist of, is a metaphor. Economic
interactions often have important elements of exchange, but crucial aspects
are missing, particularly those having to do with direct social and productive
interaction. Once this metaphor is taken for the substance of what economics
is, there are limits to what you can do.
2. Time has never been properly represented and probably can't be. The asymmetry
of temporal activity (time flows forward but not backward) butts up against
models of equilibration, as in the celebrated (on this list) Debreu-Sonnenschein-Mantel
critique of GET. Market theory is based almost entirely on one-shot games
and cannot accommodate repeated interaction over time. Fundamental uncertainty
(not knowing the probability distribution) is another stumbling block.
3. Neoclassical economics has never divested itself of 18th century monistic
individualism. Individuals and the products of their work never interact
outside markets (except when markets are "missing"). Of course, you could
have a market for every conceivable commodity, and dense interaction would
still give you multiple equilibria, path dependence, a strategic role for
power relations, etc. And our physical interventions in the world interact
ecologically.
Sociological:
Mainstream economics, by its methodology and internal organization, is systematically
closed to other social sciences and their methodologies. There are spectacular
exceptions, but they are exceptions. It is extremely difficult to gain acceptance
in the mainstream for work that takes political theory, psychology, sociology
or other fields seriously.
In compiling this list, I'm thinking of extensions of mainstream economics
to Marxism, worker-managed economies, the environment ("natural capital"),
and so on. These extensions exist, but they do not do justice to their objects.
Peter
Mengen Lucy wrote:
Hi everyone. In 3 weeks
time I will be giving a talk titled what is wrong with the mainstream economics
and the audience will be mostly mainstream economists and students! I feel
this is a good opportunity to influence some students but also feel very
nervous:o( I am quite confident about my own area, which is international
trade. However, I cannot limit my talk to international trade and I need
help. Any good books/articles (including internet), your own notes, any ideas
advice just anything would be greatly appreciated. Particularly
the philosophical/methodological weaknesses of the mainstream economics are
off interest. For example, do you know a good criticism of the utility concept?
The assumptions of the mainstream economics about human nature? Excessive
mathematicasion of economics? Anything will do.
Many thanks for your help.
Lucy
With Yahoo! Mail you can get a bigger mailbox -- choose
a size that fits your needs
Re: FW: Economists' statement opposing the Bush taxcuts
Right, this is why I didn't sign it either (despite the enormous persuasive power of my endorsement). Peter Forstater, Mathew wrote: This statement is so frustrating--chronic deficits exacerbating the long term budget outlook reduce the capacity of the government to finance... Just keep backing yourselves further an further into the corner, so you can never support common sense budgetary policy again, or only do so at the risk of having this thrown back in your face. Why not just criticize it for what its real problems are, instead of exploiting the misunderstandings about federal budgetary matters? http://www.epinet.org/stmt/
Re: Re: Re: Re: Re: Re: Re: doublethink
Sorry about linear algebra. You didn't find eigenvectors beautiful? Peter joanna bujes wrote: I only like math because it's beautiful and elegant, but I have no desire (and probably no ability) to understand why it is so. I made it through Calculus and vector calculus...was bored to tears through linear algebra...gave up after that. Took a philsophy of science course that was all p's and q's. Hated it. So sorry, Joanna
Re: Iraq war driven by a crisis of overproduction inthe USA?
In the last few days I've seen a number of posts indicating that the US obsession with deposing the Iraqi government is based on warding off the euro's threat to the dollar, by making sure oil is traded in dollars. I'm appending a reply I wrote to a friend who sent me one of these, asking for comment. FWIW, I still think the main impetus behind the war is the view that the security problems of concern to Washington (terrorist attacks on US interests, Palestinian attacks on Israel and Israelis) are ultimately due to the fact that the Islamic world is poorly integrated with global capitalism. Iraq is a convenient beachhead for a region-wide initiative. But here's the reply: Thanks, Martha. It was interesting to read this. The author is in the ballpark, so to speak, but gets some of the details wrong and is a little too conspiratorial for my taste. The author is basically right about the central importance of the dollars reserve currency status. This, more than anything else, has permitted the US to run huge current account (trade and transfers) deficits with impunity. The reasons are twofold: there is limited exchange rate risk, since, as long as international transactions are conducted in dollars, there is considerable transaction demand for the dollar to help bolster its value. The foreign exchange markets run almost entirely on psychology (speculative activity is 99% of all currency dealing), and the role of the dollar as a reserve currency is like an anchor that stabilizes expectations about its future gyrations. Second, there is a large, elastic pool of dollar holdings in reserve, and this buffers the need of the US to match its outflow of dollars (due to trade and transfers) with a corresponding inflow (by selling off its assets). In a nutshell, this permanent line of credit makes a US foreign exchange crisis an impossibility, as long as it continues to exist. It is not correct to say that the US is getting a no-interest loan, however: every year that we suck in half a trillion dollars or more in capital inflows (foreign purchases of bonds, stocks, etc.), we accumulate future obligations to remit profit and interest payments to those foreigners in dollars. This is very much analogous to the interest an individual would be required to pay on, say, credit card debt. I am not nit-picking in bringing this up, since the accumulation of these obligations expands the deficit on the current account and adds to the overall swelling of the dollar bubble. Eventually the bubble must burst. We do not know what the consequences will be. The best-case scenario (assuming the continuation of capitalism as we know it, which I suppose means we are talking about the second-best case scenario) is that some combination of austerity (recession/depression) in the US combined with a massive devaluation of the dollar (no less than 30% on a trade-weighted basis) will solve the problem. Less appetizing scenarios evoke images of financial panic, state-of-emergency political coups, etc. Without a doubt, the trigger for such a crisis would be the end of the dollars role as the worlds reserve currency. What holds the euro back, primarily, is the perceived (and actual) weakness of many of the peripheral countries in Euroland: Portugal, Spain, Italy, etc. These countries are at perpetual risk of running trade deficits with their EU partners, and with the consolidation of their various national currencies into a single euro, there is no longer an escape valve through devaluation. Thus, if these economies become uncompetitive and if their unemployment rates shoot up (Spains is pretty high already), either there will be a flood of southern Europeans trying to seek jobs in the wealthier, more productive regions (which would be a big political problem), or the euro as a whole would have to be devalued relative to the rest of the world. In other words, Germany and France might have to accept a currency whose value is set by the productivity and competitiveness of Iberia, Greece, etc. There is a pervasive sense that the targets set by the European monetary agreement that gave rise to the euro were achieved through smoke and mirrors, and that this could come apart at any moment. Perhaps the recent ascent of the euro indicates that those fears have receded; I dont know. We will find out soon enough, I suspect. In the meantime, oil is not a big factor. It is an important component in international trade, but only one of many. Moreover, the reserve status of the dollar is also reflected in the willingness of central banks to hold their foreign exchange in the form of dollars, and even in the dollarization of whole peripheral economies (especially in Latin America). On this last note, however, it should be borne in mind that the quasi-dollarization of some east Asian countries (S. Korea and Taiwan) appears to have ended, and the experience of Argentina should scare
Re: Re: Re: Iraq war driven by a crisis of overproductionin the USA?
I was reacting to a portion of the report which made the argument about pricing oil in euros. (Iraq does this; that's one reason why they are going to be invaded.) But the response I quoted was to a different piece in which that argument was the entire analysis. Peter e. ahmet tonak wrote: Is this a response to JACOB LEVICH, who interpreted the Indian report, or to the report itself. I didn't read the report yet, just briefly glanced and looked respectable to me. I posted it, as a view from the South, in my web site. If it is overtly conspiratorial let me know. Thanks. Peter Dorman wrote: In the last few days I've seen a number of posts indicating that the US obsession with deposing the Iraqi government is based on warding off the euro's threat to the dollar, by making sure oil is traded in dollars. I'm appending a reply I wrote to a friend who sent me one of these, asking for comment. FWIW, I still think the main impetus behind the war is the view that the security problems of concern to Washington (terrorist attacks on US interests, Palestinian attacks on Israel and Israelis) are ultimately due to the fact that the Islamic world is poorly integrated with global capitalism. Iraq is a convenient beachhead for a region-wide initiative. But here's the reply: Louis Proyect wrote: CounterPunch February 8, 2003 New Iraq Report Yes, Tony, There is a Conspiracy by JACOB LEVICH etc.
Re: Re: RE: $4 billion
As for the political response, it looks to me as though the Bushies are willing to risk a roll of the dice: they are betting that a war against Iraq will be swift, have few US casualties, lead to a few months of feel-good news stories about individuals or communities who now have hope (as there were after the invasion of Afghanistan) and result in a big bounce in the opinion polls. The rest of the world, they think, will just adapt. From this perspective, it's difficult to see how the peace movement can stave off the war. I really hope I'm missing something. Peter Doug Henwood wrote: Devine, James wrote: BTW, I am wondering about the Bushies' response to the peace movement. Are they simply ignoring it? or are they doing Cointelpro again? or what? What's your guess? These guys are total maximalists, rounding up people like old A. Mitchell Palmer. They've got to have some Cointelpro in the works. It'd be reckless to assume otherwise. Doug
Re: tax theory/policy
Ian Murray wrote: washingtonpost.com An Economist On a Mission R. Glenn Hubbard's Theory Anchors Bush's Tax Plan -- but Can It Survive? By Jonathan Weisman Washington Post Staff Writer Wednesday, January 22, 2003; Page E01 snip A tax system based on consumption rather than savings and investment would remove a primary impediment to economic growth. It is not easy to find economists who disagree with that theory. more snip Really?
interlocking directorates study
Here is a link to the article on interlocking directorates that has been indexed in several places recently (including ATTAC). The title is "The Network Topography of the American Corporate Elite, 1982-2001" by Gerald Davis, Mina Yoo and Wayne Baker. http://experiments.gsia.cmu.edu/speakers/Davis.pdf Peter
Re: RE: The Democrats don't know their job
To Jim's list I would add this: For structural and political reasons, the Keynesian option (public spending to compensate for shortfalls in private investment) has shriveled. There is a direct political economic consequence, the need to cater to capital, and an ideological consequence, the recognition that only private investment is productive as a litmus test for political respectability. This is true in all capitalist countries. The US situation is even more extreme, however: we are dependent on investment inflows (capital account surplus) to finance our endless, enormous current account deficit. This puts financial markets firmly in control. The US has been deep in the throws of structural adjustment for two decades and we hardly recognize it. Peter Devine, James wrote: RE: [PEN-L:33865] "The Democrats don't know their job" Pfaff's analysis is far too superficial. The reason why the U.S. Democratic Party has become increasingly useless on domestic-policy issues is because (1) the labor movement has lost any power it had, so that the DP doesn't see it as a group to cater to; (2) the civil-rights and anti-war movements have also faded (partly because of perceived victories), so that the DP doesn't see them as groups to cater to; (3) other reform movements -- such as environmentalists -- have lost their power, so the DP ... you get the idea; and (4) the big city political machines have lost their power to influence the DP to serve urban constituencies. Given the shrinking of these movements and/or their retreat into narrow interest-group politics, the DP has shifted to trying to attract the suburban voters and of course the big-money folks. They were led in that direction by the Democratic Leadership Council (of Clinton, Gore, Lieberman, etc.) but the way the US political system works has pushed them in that direction. If the DLC hadn't existed, someone would have invented it. It should be mentioned that the "good old days" of a strong DP centered on cold war liberalism, the linking of the welfare state (always anemic in the US, compared to Europe) to the warfare state and to US international domination. Before the 1970s, the DP had major components opposed to civil rights, environmentalism, and the like. So the good old days weren't so good. Jim Devine [EMAIL PROTECTED] http://bellarmine.lmu.edu/~jdevine -Original Message- From: Chris Burford [mailto:[EMAIL PROTECTED]] Sent: Tuesday, January 14, 2003 11:06 PM To: [EMAIL PROTECTED] Subject: [PEN-L:33865] "The Democrats don't know their job" This list and LBO has been criticised in more antagonistic times as too full of liberals. I thought this recent article in the International Herald Tribune by its frequent liberal europhile correspondent in Paris, was interesting. http://www.iht.com/articles/82936.htm It occurs to me that if it is true, a list like this which spans left-wing opinion, including marxist, may be of some indirect help in shifting the centre of gravity of debate in civil society. It is interesting that the article concludes that part of the problem is that the Democrats have lost touch with their working class consituency, although it does not explicitly argue that this is its way back to strategic cohenence. In the UK New Labour was quietly influenced over ten years in its formation by the eurocommunist Gramscian tendencies of "Marxism Today", which provided the theoretical basis for detaching New Labour from its traditional workerist rooots. The New Labour government has many problems but it appears strategically in command of the theoretical agenda. Is William Pfaff's analysis correct? Chris Burford London
Re: Re: query: Game Theory
I like this book a lot, but it is not suitable for undergraduate students. It is not really an introduction, but a critical essay which gets a bit technical at times. I was persuaded by their general position, however. Peter Bill Lear wrote: On Tuesday, January 7, 2003 at 09:26:35 (-0800) Devine, James writes: I've been reading GAME THEORY AND ECONOMIC MODELLING by David M. Kreps. It's a useful survey because it doesn't get bogged down in the technical details (as textbooks do) and provides some philosophical reflection on the whole GT project. Most importantly, it's not a rah-rah book promoting GT but keeps its praise tempered while explaining GT's limitations (even within the narrow confines of the neoclassical world-view). The problem is that the book was published in 1990 and is thus out of date. Does anyone know of a more recent book in this vein? Shaun Hargreaves Heap and Yanis Varoufakis Varoufakis published Game Theory: A Critical Introduction in 1995. Description from Amazon: In recent years game theory has swept through all of the social sciences. Its practi[ti]oners have great designs for it, claiming that it offers an opportunity to unify the social sciences and that it it the natural foundation of a rational theory of society. Game Theory is for those who are intrigued but baffled by these claims, and daunted by the technical demands of most introductions to the subject. Requiring no more than simple arithmetic, the book: * Traces the origins of Game Theory and its philosophical premises * Looks at its implications for the theory of bargaining and social contract theory * Gives a detailed exposition of all of the major `games' including the famous `prisoner's dilemma' * Analyses cooperative, non cooperative, repeated, evolutionary and experimental games. I liked Varoufakis' intro econ book a lot. Not sure if this is useful to you or not. Bill
Re: Re: Re: Rogoff: We're Not the Problem
You would be completely right if Rogoff thought that unemployment and falling incomes were the problem. For him (and the IMF), however, a shortage of foreign exchange for debt service is the problem (just like his brother's inability to pay his loans was a problem). Here the fallacy is not the Keynesian one, but the bogus collectivism by which an individual's debt is equated with the external debt of a country. As we all know, a few ultra-rich folks can engage in capital flight, and this becomes a problem to be solved on the backs of the majority of working people who have never had the wherewithal to be profligate in the first place. I've always found it interesting that, in international trade and finance, the "nation" is used as a unit of analysis by a profession that is so dogmatically individualistic in the rest of its thinking... Peter Michael Pollak wrote: On Wed, 1 Jan 2003, Peter Dorman wrote: Michael, I don't think Rogoff is making the econ 101 mistake you attribute to him. He is arguing against the post hoc ergo propter hoc fallacy that, because austerity follows IMF intervention the IMF is necessarily responsible for it. Yes he tacks that on at the end. But most of the article is taken up with saying that austerity at his brother's house is like austerity in a national budget -- missing the obvious difference that, unlike his brother's baking business, if a government cuts down on its spending in bad times, it doesn't save, it worsens the bad times. Michael
Re: Rogoff: We're Not the Problem
Michael, I don't think Rogoff is making the econ 101 mistake you attribute to him. He is arguing against the post hoc ergo propter hoc fallacy that, because austerity follows IMF intervention the IMF is necessarily responsible for it . The problem is not that the IMF loans money, however, or that it attaches conditions, but that the conditions are (mostly) ideologically driven and serve a very narrow set of interests. In other words, Rogoff is attacking a straw man and avoiding the real criticisms of the IMF. Peter Michael Pollak wrote: [This seems kind of unbelievable. Isn't the first fallacy that economics 101 sets out to refute the idea that a household budget is analogous to a set of national accounts? I thought it was regarded not only as a fallacy but as the shibboleth of economic ignorance. Has something changed that a Harvard economics professor can base his whole case on it? Or is Rogoff just that completely disingenuous?] [If something has changed, if some economists feel they've disproved this fallacy in some subtle way, that would explain a lot -- like why the Hooverism that was based on the fallacy now seems to be everywhere respectable again.] The IMF is Not the Problem By Kenneth Rogoff Economic Counselor and Director, Research Department International Monetary Fund Syndicated and Published in the following: The Nation (Thailand) on October 30, 2002 L'Avenir (Congo), Business Day (South Africa), Business World (Philippines), Taipei Times (Taiwan), Aripaev (Estonia), Logos Press (Moldova) Delovoy Peterburg (Russia), Finance (Slovenia), El Cronista (Argentina), El Diario (Chile), El Observador (Uruguay), Financial Mirror (Cyprus) Independent (Bangladesh). Throughout much of the world, the IMF is caricatured as a demon of austerity. Wherever the IMF appears on the scene to provide financial assistance, painful government budget cuts seem certain to follow. This image of austerity appeals to the emotional need for stories with villains. After all, good villains sell booksincluding books about globalization that demonize the IMF. But does the image reflect reality? Is the IMF, the member of the UN family charged to maintain global financial stability, really so evil or misguided that it can only propose policies that inflict economic pain instead of alleviating it? I admit that the IMF has its faults, and I don't aim to gloss over them. Until a year ago, when I left a professorship at Harvard University to become the Fund's chief economist, I was a vocal, if perhaps not vitriolic, critic of the IMF's management of the international monetary system. Although the IMF has changed a lot in recent years, there is no denying that there are still major holes in the international systemnot least the lack of a fair and orderly procedure for dealing with highly indebted countries that become insolvent. The IMF is working to fill that gap now. But the austerity charge is misconceived. Troubled countries knock on the Fund's door for financial assistance only when all other creditors have turned their backs. In most cases, a country is already in desperate fiscal straits by the time IMF economists arrive on the scene to discuss a loan. More often than not, the country has over-extended itself financially through some combination of imprudence and bad luck. Countries come to the IMF precisely because they know that it will lend to them when no one else will, and at interest rates lower than most could only dream of, even in the best of times. IMF loans thus relieve austerity: they help governments limit the amount of budgetary belt-tightening required in a crisis. You think I am crazy? Allow me to draw an analogy from my personal finances. Just after I finished school, my older brother Hal ran into some financial difficulties. He and his wife had started ripping out all the walls, plumbing, and wiring in their modest Washington apartment, hoping to refurbish it prior to the arrival of their first child. It was an ambitious plan, but it seemed doable -- until Hal started having problems with his baking business. Suddenly they found themselves desperately over-extended. Hal went to the bank for a loan, but with his business struggling, he didn't qualify. With all his credit cards at their limit, and all his cash gone, Hal finally came to me for a loan. I had managed to put aside some modest savings, which I freely lent him indefinitely at zero interest. Even with my help, things weren't easy. Hal had to work longer hours than ever before, and he still had to sharply cut back on household expenditures across the board. But my loan did help, eventually Hal's business recovered, my nephew was born and -- much later -- the apartment remodeling project came to a successful conclusion. Now, did my brother blame me for the period of belt-tightening austerity his family had to face? No, obviously not. Admittedly, this is a simplistic analogy, but it captures the essence of the issue. Yes, I did
Christian economics [was Re: Re: Re: Re: Re: Bush AdministrationOn The Poor: Pay More Taxes!]
My litmus test for "Christian economists" is the jubilee. Peter Ian Murray wrote: - Original Message - From: "andie nachgeborenen" [EMAIL PROTECTED] To: [EMAIL PROTECTED] Sent: Wednesday, December 18, 2002 7:03 PM Subject: [PEN-L:33205] Re: Re: Re: Bush Administration On The Poor: Pay More Taxes! Nay, it's more complex than that. In the US, one would have to wade through all the books and magazine articles espousing "Christian economics"; yes such a beast does exist along the lines of Islamic economics etc. Check out the nearest large Christian bookstore near you.I'm not joking. Does it call for driving the moneylenders out of the temple, giving all that you have the poor and following Him, while (of course) rendering under Caesar what is Caesar's? jks = If only it were as simple as that: http://www.acton.org/publicat/m_and_m/2001_fall/pdf/MM-v4n2-Woehrling.pd f http://freebooks.entrewave.com/freebooks/docs/2236_47e.htm Ian
Re: Re: Bush Administration On The Poor: Pay More Taxes!
Even the neoclassical view is that markets reward not effort or even productivity in a physical sense, but the "value" of the marginal product--that is, contributions or skills which are scarce in view of demand. This is an efficiency argument at best, not an equity argument. But then throw in luck, connections, discrimination, power that results from your place at the bottom or top of the hierarchy, and it's not too difficult to argue that the reward inequalities stemming from the system need to be sanded down... Peter Ian Murray wrote: - Original Message - From: "Ellen Frank" [EMAIL PROTECTED] What people deserve is exactly the issue the right wing will raise -- the rich deserve their luxuries and the poor have no right to take what others have earned fairly (I guess they'll want to leave Ken Lay out if it). How do supporters of a progressive tax respond unless they are willing to say the existing distribution of income is fundamentally unjust? Ellen == Dismantling the right's use of desert arguments will need to encroach in a big way upon the failings and strengths of the self-ownership thesis we've inherited from Martin Luther and John Locke. This is extremely difficult territory to navigate when explaining social causation and the sources of selfhood in terms citizens can easily digest. The quotes I posted from Frank Knight show how a "secular Calvinist" and darling of the right can provide a toehold when the policy wonking begins in earnest. Demonstrating that the libertarian approach to responsibility and causation can no longer carry the explanatory and justificatory burden many on the right simply assume to be valid has been taken up quite a bit lately by political philosophers in the journals Philosophy and Public Affairs and Ethics and are well worth checking out. Ian
Re: EC subsidies redux
Does anyone know why Oxfam has jumped on this bandwagon? Peter Ian Murray wrote: Oxfam savages EC farm export reforms Andrew Osborn in Brussels Tuesday December 17, 2002 The Guardian Long-awaited proposals to abolish most of the EU's notorious farm export subsidy regime drew a withering response from aid agencies yesterday. Accusing the European commission of betraying the interests of farmers in the developing world, the agencies said the proposals were belated, half-baked and completely irrelevant, doing nothing to stop EU farmers from dumping millions of tonnes of subsidised farm products on poor countries every year. The proposals, presented by the EC yesterday as the EU's contribution to the latest round of global trade talks, offer to reduce import tariffs by 36%, cut export subsidies by 45% and lower trade distorting domestic farm support by 55%. According to aid agencies, the proposals are not half as generous as they seem and the fact that they are contingent upon the US following the EU's example mean they are worth less than nothing. It's either an act of malice or a pre-Christmas leg pull, Kevin Watkins, head of research at Oxfam, said. If you read between the lines it does almost nothing. The reduction in export subsidies will only take effect by 2013, which means that the EU will still be paying out billions of dollars in subsidies a year. It talks of cutting trade-distorting subsidies but doesn't include direct payments to farmers at all. Crucially, some of the EU's biggest farm exports such as sugar, dairy products and beef were excluded altogether. A fifth of the world's population lives on a dollar a day and three-quarters of those people are small farmers. Many of those farmers are forced to compete against floods of EU farm imports which have been heavily subsidised by European taxpayers and, according to Oxfam, they were the biggest losers yesterday. The commission has signalled that it is genetically incapable of producing a proposal that takes account of the interests of developing countries, Mr Watkins said. It is always going to put the interests of its own agri-business first and that's a tragedy. This is a dumpers' charter. It will allow the EU to continue to subsidise big farmers. The EU is incapable of exercising global leadership in this area. Anticipating the criticism, Franz Fischler, EU farm commissioner, said he had done the best he could. These are substantial changes. Let us not underestimate them. He noted that EU farm export subsidies had dwindled over the past 10 years from 30% to 8% of the bloc's budget. Pascal Lamy, the EU trade commissioner, mounted a vigorous defence: This is a win-win proposal. It is fair to others, particularly developing countries, as it takes into account their development needs. Oxfam said that the commission could have been far more generous. It could and should have tackled all forms of export subsidies and done so immediately, it claimed. [The EC proposal] would leave untouched the great majority of subsidies that ruin the lives of poor people in developing countries, said Justin Forsyth, Oxfam's policy director.
Re: Easterbrook's claims
See the most recent State of Working America, put out by the Economic Policy Institute (and available at the moment only in pre-pub form), or any of the recent SoWA's. The evidence on inequality is mind-numbing in its detail and thoroughness. Easterbrook doesn't have the slightest basis for his claim about immigration. Which says that his economics is on the same exalted level as his ecology. Peter F G wrote: I followed the link posted by Lou where Easterbrook review's Singer's new book: http://www.washingtonmonthly.com/features/2001/0211.easterbrook.html Much of the article is not worth responding to, since it argues that "globalization" is good without bothering to define it. However, I was interested in the following claims: snip "(And the endless "widening gap between rich and poor" in the United States? This is an artifact of the huge rise in legal immigration in the last two decades. Factor out the low incomes of the newly arrived foreign-born, and the gap between rich and poor Americans is shrinking. But that's a story for another day.)" Any comments on this? Note that the massive rise in immigration is at least in part due to global inequality and third world regression. -Frank G. _ Help STOP SPAM with the new MSN 8 and get 2 months FREE* http://join.msn.com/?page=features/junkmail
Re: derailing trade talks
I for one am irritated with the new correct line on trade in agricultural goods: agricultural subsidies are bad, and free trade is the solution for impoverished farmers in the third world. (1) If we want to reverse the continuing transformation of agriculture into unsustainable and de-cultured exploitation of nature, there is no alternative to large-scale subsidies. There are legitimate questions, of course, in how the subsidies should be administered. (2) Export-led development is no more the answer for third world agriculture than it is for third-world industry. Even worse, it erases opportunities for subsistence at a time when extreme poverty is ubiquitous. (3) What empirical research there is suggests that, even in narrowly-specified market terms, there is a very small gain to be had to third world farmers from free trade in agriculture. Let's work to build a vibrant, sustainable rural culture in our own countries, and healthy domestic markets and egalitarian access to resources in the third world (and vice versa). Peter Ian Murray wrote: Short takes a tilt at CAP EU subsidies will wreck trade talks and drive up poverty, says development secretary Larry Elliott, economics editor Tuesday November 19, 2002 The Guardian Clare Short, the international development secretary, will today attack the common agricultural policy with a warning to the European Union that failure to cut huge farming subsidies will deepen poverty in developing countries by wrecking global trade talks. Her intervention is a clear sign of Britain's belief that last month's deal between Germany and France to ring-fence spending on the CAP for the next 10 years will harm poor countries. She will say that resistance to measures that would prevent over-production and the dumping of excess crops on world markets will destroy the chances of trade liberalisation talks succeeding. She will urge today's meeting of the EU general affairs and external relations council in Brussels, which is finalising Europe's policy on trade and development, to join opposition to production subsidies that lead to goods being sold on world markets at prices lower than they cost to produce. The World Trade Organisation launched the current round of talks in Doha last No vember, but progress has so far been stymied by the failure of the West to make good promises on agricultural reform. Pressure from seven of the EU's 15 member states - France, Italy, Spain, Portugal, Greece, Austria and Ireland - has resulted in any mention of CAP reform being omitted from the draft to be discussed by ministers today. Ms Short will tell the meeting that any money Europe spends on agriculture must be diverted into support for rural communities rather than be used to finance over-production. We must be committed to reform of the CAP to deliver on the Doha measures. Failure to do so would cause fatal damage to the prospects of Doha succeeding, she said last night. Developing countries had only signed up for a new round of talks in Doha a year ago because they had won assurances that the EU and the US would take steps to scale back subsidies for farmers. Developing countries made it clear that there would be no trade round unless they made gains. That's why the promises were made. Now the European Union has to deliver. Ms Short said that unless the EU agreed to disconnect pro duction from subsidies, it will be destroying Doha. We had an unprecedented consensus a year ago when the talks were launched. If the Doha round goes sour it will break that up, it will endanger the WTO and it will lead to the further marginalisation of poor countries. Her intervention in the increasingly bitter row over the future of the CAP comes as the chancellor, Gordon Brown, plans to call on the West to support a new deal for Africa. He will spend the next few months seeking support among the G7 industrial nations for a four-part package, which would include better access to rich western markets and a doubling of aid to $100bn (£63bn) a year in return for economic stability and proposals by poor countries to root out corruption. Britain was furious at last month's deal between France's Jacques Chirac and Germany's Gerhard Schröder to maintain spending on the CAP, which costs Europe £25bn a year. Sources said that France's avowed concern about the plight of Africa and Spain's interest in Latin America were at odds with their point-blank refusal to discuss meaningful CAP reform.
Re: protection rents, part 1
It's beginning to look like, financially, Iraq II will be the opposite of Iraq I. Ten years ago, the US fought the war as a mercenary and was repaid by other capitalist powers; we ended up with an approximately $100B transfer on the current account. This time around, the US will have to be the one to shell out for acquiescence to an unpopular war. Peter Ian Murray wrote: U.S. Discusses Aid for Turkey to Defray Costs of an Iraq War By Bradley Graham Washington Post Staff Writer Tuesday, November 19, 2002; Page A20 The United States has begun discussions about compensating Turkey for economic losses and other costs likely to be incurred in a U.S.-led war against Iraq, according to American and Turkish officials. Both sides described the discussions as still at an early stage and marked by a wide gap in what the Turks would like to receive and what the United States is willing to pay. But the mere existence of the talks, which participants said were initiated by the United States within the past two months, reflects the importance that U.S. officials place on Turkey in any war with Iraq. A longtime NATO ally bordering northern Iraq, Turkey is in position to serve as a crucial base for U.S. military operations. Its bases and airfields would likely be prime staging areas for American forces, and Turkish troops could play a significant role policing the flow of refugees from Iraq or guarding prisoners of war. At the same time, U.S. officials have expressed concern that Turkish forces may attempt to take advantage of a war and occupy northern Iraq to block the creation of an autonomous Kurdish region, which could serve as a base of operations for Turkey's own separatist Kurds. Preparing for possible military conflict with Iraq, the Bush administration has launched a number of diplomatic and military moves to secure basing, overflight rights and other crucial assistance from countries in the Persian Gulf region and elsewhere. But U.S. officials described the offer of economic assistance to Turkey as unusual, saying similar discussions have been initiated with only one other ally in the region -- Jordan. We've told them that if there is military action against Iraq, we would recognize that Turkey would have some losses and we would have to move in some fashion to help them, a senior administration official said. As another sign of the high-level attention that Turkey is receiving within the administration, President Bush got involved yesterday in furthering Turkey's bid to join the European Union. He phoned the EU president, Danish Prime Minister Anders Fogh Rasmussen, and stressed the importance of advancing Turkey's evolution toward membership when EU leaders convene in Denmark next month, according to a White House spokesman. Bush also plans to meet with Turkish President Ahmet Sezer on Wednesday while the two leaders are in Prague for a NATO summit. Turkey already allows U.S. and British warplanes to use an air base at Incirlik to patrol a no-fly zone over northern Iraq established after the 1991 Persian Gulf War. U.S. authorities express little doubt that Turkey would support the United States in another war with Iraq. But Turkish officials fear the potential economic and political consequences. Turkey lost billions of dollars in tourist revenue and trade with Iraq as a result of the 1991 war and confronted a surge in Kurdish refugees. With their economy now in recession, many Turks see another war as undercutting the prospects of recovery and further straining their country's massive debt burden, which is being helped by $16 billion from the International Monetary Fund. They also express concern that a war could reignite unrest in Turkey's mainly Kurdish southeast, where the military has spent much of the last two decades fighting Kurdish separatists. It was public outrage over the state of the economy that helped fuel a victory in Turkey's national election earlier this month by the Justice and Development Party, whose leaders hold strong Islamic beliefs. So far, however, U.S. officials say they have been encouraged by some of the new leading party's initial moves. We're favorably impressed with the quality of people being mentioned for the top economic posts and other ministerial jobs, another senior administration official said. U.S. and Turkish officials familiar with the discussions over a war compensation package said several options have been mentioned, including outright grants, preferential trade terms for Turkish exports to the United States, U.S. military equipment transfers and contracts for Turkish firms to help in the reconstruction of a post-war Iraq. We've heard a wish list from the Turkish side, a senior official said. There's a whole host of ways it could be structured. Turkish authorities said they also hope for a significant boost in U.S. aid even if no war comes. They say just the talk of war has shaken Turkey's economy, discouraging tourism and trade, raising oil
Re: Birds of a feather
In his first paragraph, Easterbrook reveals he hasn't read Singer, but rather the people who write about Singer. Given his rather loose standards of intellectual accountability (also revealed in his past writings on environmental issues), his endorsement of this latest book is of little interest. Singer is not my favorite philosopher, but he's not bad for a utilitarian. Peter Louis Proyect wrote: (Sooner or later it had to happen. Peter Singer, an animal rights leftist, who also argues that handicapped children should be killed for their own good, has written a new book promoting globalization in the Thomas Friedman Lexus and the Olive Tree mold. What's next? A proposal to turn famine victims in Africa into cattle feed? The reviewer Gregg Easterbrook is a knucklehead of long standing who has made a career out of debunking such hysterical fears that nuclear power, DDT, GM crops, etc. might be bad for you.) Washington Monthly Online Greatest Good for the Greatest Number Philosopher Peter Singer will anger his traditional lefty fans with a clear-eyed account of the benefits of globalization. By Gregg Easterbrook Yes, it's that Peter Singer. The one who has suggested that animals sometimes have the same rights as people, that the old should be euthanized to divert resources to the young (though he would spare his own infirm mother), that Americans should give away almost everything they possess to the developing world and live themselves like the developing world's poor (Singer donates to charity but he hasn't given almost everything away, as he advised others to do, and won't give to bums on the street). The Peter Singer who has said that utilitarian arguments can justify killing the innocent if benefits to others are large (a chilling thought, but also U.S. policy, as it is on utilitarian grounds that U.S. forces have killed some innocent people during the campaign against al-Qaeda in Afghanistan; presumably, Singer supports this). The Peter Singer who has suggested that severely handicapped infants should be killed for their own good (strangely, only people who were not born severely handicapped take this view), whom The New Yorker has called the world's most influential living philosopher (which mainly tells us how little anyone cares about living philosophers, a state of affairs which the profession has largely brought on itself), and whose appointment to a chair at Princeton University aroused considerable alumni protests and the cancellation of some pledges. People have even protested the name of the chair he holds--Singer is now the Ira DeCamp Professor of Bioethics at the University Center for Human Values of Princeton. How can Singer have a chair at the University Center for Human Values, the line goes, when he is inhuman? Yes, that Peter Singer. Since his views are much hashed over, it may be best to skip beyond his prior statements here, other than to make two points. First, as I wrote in the previous paragraph, Singer has suggested most of his notorious positions. There is, in fact, an awful lot of high-class weasel-wording in his work, indicating either that he can't make up his mind or that he wants to have it both ways, grabbing attention by saying stark things, then indignantly claiming misquotation and pointing to some buried caveat when attacked. Second, when The New Yorker called him out on how he can say that other people's aging mothers should be put down like old horses but that his own should receive only the very best care in an expensive nursing home, Singer replied, Perhaps it's more difficult than I thought before, because it is different when it is your mother. So my grand pronouncements apply to everyone else but not me! There's a word for this. And, as Peter Berkowitz has written, someone who presents himself to the world as an ethicist is supposed to have thought through the practical consequences of his ethics. These points aside, One World is a pretty good book; if it did not come with Peter Singer baggage, I might say a darn good book. Singer, generally a hero to the loony left, struggles with the issues of globalization in a rigorously hard-headed manner rarely seen on this topic. Singer discards, or even shreds, much anti-globalization cant, focusing on which international economic policies will have the utilitarian outcome of raising living standards for the developing world's poor. (Singer does not much care for the term utilitarianism, but it is the best shorthand for his value system, whose fine points cannot be fit into this space; broadly, he wants to raise the standards at which the human race lives as a whole to the highest aggregate level, which entails focusing upon the disadvantages of the developing world, and thinks our obligations to all members of genus Homo have about the same standing as
Re: Re: Re: Birds of a feather
Singer doesn't take the positions Easterbrook has attributed to him. You don't have to agree with Singer (I often don't) to appreciate this. There was an article in the Chronicle of Higher Ed about a year ago that was fair-minded, I thought, on Singer and his critics. The man is not a monster... Peter e. ahmet tonak wrote: How did you conclude that Easterbrook hasn't read Singer? Peter Dorman wrote: In his first paragraph, Easterbrook reveals he hasn't read Singer, but rather the people who write about Singer. Given his rather loose standards of intellectual accountability (also revealed in his past writings on environmental issues), his endorsement of this latest book is of little interest. Singer is not my favorite philosopher, but he's not bad for a utilitarian. Peter
Re: RE: Re: economics on pen-l
Devine, James wrote: RE: [PEN-L:32288] Re: economics on pen-l Peter D writes:... I'm wondering whether foreign central banks are already financing the US current account deficit, in light of the weakness in US financial markets. don't you think that it's foreign financiers that are doing so, rather than central banks? they're buying up US assets, allowing the US to run a current account deficit. If the CBs are doing anything, it's accumulating dollars and dollar-denominated short-term assets because they are useful reserves (since the dollar acts as world money). Do you think that the CBs play a big role? My suspicion is that the private inflow of investment has not kept up with the US need for half a trillion a year. Certainly not in equities, and perhaps also not in debt assets, due to possible exchange rate risk. The dollar is indeed the world's liquidity, but its days (OK, years) are certainly numbered, and sensible investors would want to avoid too much exposure. As I recall, there was also a year during the early 80s when foreign CB's stepped in to cover for the reluctance of private wealth-holders. I'm guessing that 2002 will also turn out to be such a year, but I could be wrong. As to why the CB's would do this, you could take your pick from (1) it's not in anyone's interest to have the dollar crash and bring down the global economy with it, (2) they are protecting the private positions in the dollar taken by their own nationals in particular, (3) they are supporting the US as a bastion of free-market rectitude, and (4) they are supporting an overvalued dollar to sustain their own export surpluses. ... If so, what implications, if any, does this have for global political economy? How can we explain Bushite unitaleralism and in-your-face hegemony in light of the increasing fragility of the US external position? the role of the dollar as world money is based on the power of the US. Bushite hegemonism seems just one way to maintain and extend that power, centering on the military side. The Clintonoids put greater emphasis on the financial/economic side of US power along with trying to encourage consent among the governed, don't you think? But these are variations on a theme. The strength of the dollar depends entirely on the willingness of the rest of the world to accumulate them at the rate of one-half trillion a year. Private wealth-holders will do so based on expectations of risk (exchange rate and liquidity) and rate of return. Public dollar repositories (CB's) will do so for either economic (including liquidity) or political reasons. It seems to me that the Bushies cannot afford to alienate the interests that govern CB decision-making. The current military power buildup may be seen as a basis for supporting the dollar (an implicit quid pro quo if you will), or it may be seen as reckless and overly unilateral. How would you analyze the effect of US militarism on the willingness of CB's to accumulate dollars? Moreover, if we assume that serious money is now international (international portfolios and their mirror-image, international ownership of corporations, financial institutions and tradeable funds), how do we think about the constraints, if any, on US economic policy? (It doesn't look like we have vehicles for domestic constraints at the moment.) Or is US policy really reflective of a global consensus among the rich? maybe a consensus, but one that reflects US power. It's quite possible that the value of the dollar is currently too high given the level of US power. But we can't know for sure. Jim
Re: economics on pen-l
Agreed -- let's hear more analysis of the near-term economic situation. I'm wondering whether foreign central banks are already financing the US current account deficit, in light of the weakness in US financial markets. (We won't know until the numbers come out, some time from now.) If so, what implications, if any, does this have for global political economy? How can we explain Bushite unitaleralism and in-your-face hegemony in light of the increasing fragility of the US external position? Moreover, if we assume that serious money is now international (international portfolios and their mirror-image, international ownership of corporations, financial institutions and tradeable funds), how do we think about the constraints, if any, on US economic policy? (It doesn't look like we have vehicles for domestic constraints at the moment.) Or is US policy really reflective of a global consensus among the rich? Peter Michael Perelman wrote: The sh* is hitting the fan. I think that knowledge of Bush's economics plans will be very important in the coming months. Some of us will be called upon to make public statements about what is afoot. Isn't it important that we do more to get us up to speed on such matters? The bankruptcy bill, as Robert Manning has insisted, would have be strong drag on the economy. Tax cuts and privatizing employment will not have a positive aggregate effect over and above its redistributional effects. Also, the Repugs are trying to shift liability in a number of ways -- curtailing punative awards by electing conservative state courts, restricting suits on vaccines, giving subsidies to terrorism insurance -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail [EMAIL PROTECTED]
Political Economy of US foreign policy
Here's request #2 in my never-ending effort to put together a syllabus for next quarter. Does anyone have a suggestion for readings on the political economy of US foreign policy, particularly military strategy? The ideal reading would be fairly up to date, grounded in official policy documents and descriptive of the iron fist that enforces the invisible hand. It would not be overly rhetorical, tendentious or wedded to an idiosyncratic economic or political philosophy. It could be a book or a fairly comprehensive article. It could be a case study if it is grounded in a broader framework. Please reply offlist. Thanks. Peter
Re: Oh!...uh...
Gil Skillman wrote: (Was: uh-oh ii) Will the Republicans quickly overreach themselves? How much long-term damage can they do in two years? Will the Democrats ever wake up? As for the third question, perhaps the adverse election results will finally shock the Demos into realizing that they're not going to succeed by acting like pseudo-Republicans. If they're going to lose anyway, they might as well lose by addressing the issues, providing real alternative, and potentially energizing the alienated and marginalized who right now see now real choices. Perhaps, but we should not forget that the implosion of the institutional left (labor parties, social democratic parties, reformist parties like the Democrats, etc.) has occurred in every advanced capitalist country. The same vacuum on the center-left can be found in the UK, France, Germany, Japan, you name it. Obviously, something structural has taken place in the world economy that has changed the balance everywhere. I have some thoughts on this, but I'm ducking out right now -- going offline for the next two days. People usually don't reply to my posts on this list, but I would be interested in seeing what speculations you folks come up with. Why is 2002 so different from 1962 or 1972? Peter
Re: Roach on Asia
I'm still trying to book up on this topic, but it seems to me that China's entry into the export-led growth game has been a crucial factor for many years now, and probably played a contributing role in the 97 financial crisis. Export-led growth of the east asian variety has always been zero or near-zero sum, so the infusion of Chinese supply capability is of overwhelming importance. If this view is correct, it suggests that an era is over (except perhaps for China), particularly if US demand pulls back into a long-term equilibrium with income. Peter Ian Murray wrote: Global: Asia Is Now a Zero-Sum Game Stephen Roach (from Shanghai) Apart from China, there is no dynamism in Asia these days. At the end of a two-week Asian tour, I am struck by a grim sense of foreboding that is evident throughout this once vibrant region. While the growth story in China is alive and well, economies elsewhere in the region are sputtering, at best. As America slows, a US-centric global economy is in desperate need of a new growth engine. That engine is not to be found in Asia. The year 2002 has turned out to be an important stress test for a US-centric global economy. A sputtering American growth dynamic has taken a surprisingly heavy toll on the rest of the world. The reverberations have been especially acute in two key regions of the world -- Europe and Asia. Not only has the engineless global growth dynamic unmasked serious structural flaws in Euroland, but it has also revealed serious deficiencies in Asia's externally led growth model. As I have traveled extensively throughout the region over these past two weeks, the only question that seems to matter is the prognosis for the US economy. Needless to say, my answer does not exactly provide for a very uplifting discussion. It's always risky to generalize about a region so diverse as Asia. There are really three distinct stories to tell in Asia these days -- Japan, China, and the rest of the region. After all these years, I continue to be amazed at how Japan still has the potential to disappoint. And yet that's exactly what has happened to the latest reform effort. During my visit to Tokyo 10 days ago, you could literally feel a sense of movement in the air. The Takenaka effort at bank reform, in the aftermath of the Bank of Japan's radical purchase of equities, spoke of a new potential to break a dozen years of inertia. And I fell for it. But the leadership of the ruling LDP party demonstrated once again what makes Japan's case for reform so hopeless. Yet another effort at cleaning up the banking system was quashed by the power structure. The moral hazard of Japan's convoy system emerges once again very much intact -- banks remain too big to fail, as do their zombie-like corporate borrowers. Meanwhile, the Japanese economy has taken yet another turn for the worse, as evidenced by recent disappointing trends in industrial production, inventories, employment, and personal consumption. It's déjà vu all over again. Sadly, Japan just doesn't seem as if it will ever get up off the mat again. Nor is the rest of Asia (excluding China) standing on its own and resisting the pressures of a tough global climate. Korea -- where hope for vigor was highest in the first half of this year -- has suddenly slowed. Industrial output growth screeched to a near halt in September, and private consumption growth has slowed markedly; even Korean export growth has slipped from the heady gains recorded earlier this year. In Taiwan, the recent US port strike appears to have prompted some August-September gyrations; however, looking through the noise, rising unemployment and likely fourth quarter moderation in output and export growth all point to a decided deceleration of the Taiwanese economy well into 2003. Meanwhile, manufacturing output growth has slowed appreciably in Singapore and Thailand, whereas Hong Kong remains trapped by the twin forces of deflation and rising unemployment. Lacking in domestic demand, the smaller economies of Asia have little to show for themselves in the face of a US-led slowdown in external demand. And then there's China -- an entirely different story. In contrast to the near synchronous slowing elsewhere in Asia, the Chinese economy is on an accelerating growth path. All of the September numbers were sending unambiguous signals of a quickening of economic activity. That's true of industrial output, exports, infrastructure spending, and foreign direct investment. It's also true of an equally impressive acceleration in GDP growth to an 8.1% YoY rate in 3Q02 (see my October 17 dispatch, The China Factor). China continues to be the fastest-growing economy in Asia, or for that matter, the world. And that's true irrespective of the slowdown in the broader global economy. The math of China's growth contribution underscores the key role this country is playing in driving Asian and global growth. At current
Re: RE: Re: against lesser of two evils
"Devine, James" wrote: > This is not principled politics. It is > old-fashioned liberal pragmatism. so are you saying that Leon Trotsky should have rejected any connection with John Dewey, because he was the leader of liberal pragmatism? Jim As a fan of Dewey in his more radical moments (see Westbrook's bio), I've sometimes wondered whether he should have associated with Trotsky... Of course, the Moscow trials were the greater of any number of evils. Peter
Re: Now for the real fight over Iraqi oil
I can understand the concerns of European capitalists that they will be locked out of Iraq, but if I were the betting type, I would put my money on the probability of a compromise by the Bushies on this. They will probably gouge a little (old habits die hard), but I think they would put mending fences among major capitalist interests above goodies for their cronies. Russia could well be out in the cold after the rubble clears, however. In the end, the war is more than just a financial investment. Peter Chris Burford wrote: From today's Guardian, no lightweight article:- BP chief fears US will carve up Iraqi oil riches Terry Macalister Wednesday October 30, 2002 The Guardian Lord Browne, chief executive of BP and one of New Labour's favourite industrialists, has warned Washington not to carve up Iraq for its own oil companies in the aftermath of any future war. The comments from the most senior European oil executive, who has impeccable political connections in the UK, will be seen by anti-war protesters as further proof that US president George Bush has already made his mind up about an early attack. They will also serve to underline concern that the US is primarily concerned with seizing control of Saddam Hussein's oil and handing it over to companies such as ExxonMobil rather than destroying his weapons of mass destruction. Britain's biggest company is reviewing what impact a regime change in Baghdad would have on its own business and global crude supplies. Both London and Washington have been lobbied by the UK oil giant, which is concerned that European companies could be left out in the cold. We have let it be known that the thing we would like to make sure, if Iraq changes regime, is that there should be a level playing field for the selection of oil companies to go in there if they're needed to do the work there, said Lord Browne yesterday at a briefing on the company's results. Lord Browne said that most exploration for new supplies had halted there when the Iraqis nationalised their industry. But he believed there was a plenty of oil and gas waiting to be discovered in Iraq and that BP should be in prime position to capitalise because it had found most of the country's oil before being thrown out in the 1970s. BP said it had had no contact with Baghdad since 1989. Iraq's reserves amount to 115bn barrels of oil, making it the biggest source of oil in the world behind Saudi Arabia. Lord Browne's views will be listened to carefully in Downing Street because the BP executive team has such close links with the UK government that it was once dubbed Blair Petroleum. A number of former BP executives, such as Lord Simon, have been seconded into Whitehall while one of Mr Blair's personal assistants, Anji Hunter, joined Lord Browne's team. Impending war with Iraq has given a financial boost to BP and other western oil firms by driving up the price of oil to $27 per barrel. Could there be a folk memory here of past imperialist glories and intimate relationships with government? Google comes up with a BBC briefing of 11 Aug 1998: the company's origins go back to 1901, when a wealthy Englishman, William Knox D'Arcy, ventured into the Iranian desert to search for oil. For seven years, Mr D'Arcy battled with difficult terrain, an uncertain political situation and rising costs. But in 1908 the venture found oil in southwest Persia. One year later, Anglo-Persian Oil was formed. However, by then most of the company was owned by the Burmah Oil company. Government backing Shortly before World War I, Anglo-Persian managed to find a new backer - and good customer. After lengthy negotiations, the oilmen promised Winston Churchill, then First Lord of the Admiralty, secure supplies of oil. In exchange the British government injected £2m of new capital into the company, acquired a controlling interest and became de-facto the hidden power behind the oil company. The years between the wars were an era of expansion, with exploration in Canada, South America, Africa, Papua and Europe. In 1935 the company was renamed Anglo-Iranian Oil Company. British Petroleum 1951was a crucial year in the company's history. Iran decided to nationalise the company's assets, which back then were the UK's largest single investment overseas. Three years later the conflict was resolved - in the same year that the company was renamed British Petroleum Company. The Iranian crisis had convinced BP that it had to broaden its activities. In the following years the company started explorations in other Middle East countries, like Kuwait, Libya and Iraq. Forget about Sadaam Hussein, lets sort out the real imperialist battle once and for all, with the USA, unless they are prepared to give us intrepid Brits a genuine level playing field!Willie Knox D'Arcy would have demanded no more and no less. Chris Burford London
globalization text
Can anyone out there help me find a suitable book for an undergraduate course that covers, among other things, globalization? The ideal book would have description of the main institutions, economic and political history since at least 1980, discussion of global economics and economic outcomes and linkages between economics, politics, and the other dimensions (military force, race, gender, culture, etc.). The political stance is largely irrelevant, since the students will be getting plenty of PE theory and immersion in specific issues elsewhere. So far, I've looked at the new Tabb books (Elephant, Uneven Partners), and I don't find nearly enough substance in them for students new to the topic. Last night I checked out recent books by Gilpin and Scholte, as well as a reader edited by Held and McGrew. Scholte and HM were much too soft: very little factual information, with mostly theoretical debates of interest to globalization academics (is glob new or old, do states have more power or less, what is the fate of postmodernism, and so on). Scholte appears to have no background whatsoever in economics; the closest he comes is second-hand Marxism. Hence no significant discussion of global finance, etc. As for Gilpin, there's actually too much economic material -- he's too detailed in his treatment of technical questions in international economic negotiations. His neoclassical mindset becomes a problem in that he foregrounds some issues (like the putative imperative of overcoming protectionism) at the expense of others that need much more treatment (like alternative development strategies). So none of the above are adequate. I'm open to other suggestions. Again, I couldn't care less what the analytical bias of the author is, so long as the relevant material gets covered. Students here (at Evergreen) seminar on all their readings, and they will take apart anything we put in front of them (usually). Other readings have already armed them for the task. A cogent right-wing text would serve our purposes just as well as a more sympatico left-wing one -- and much better than a flabby progressive text. You can reply offlist if you want, and I will summarize for our vast and growing public. Thanks, Peter
Re: RE: globalization text
Too narrow -- it focuses just on the financial architecture problems that were debated by the mainstream after the '97 panic. I'm really surprised Robin wrote such a narrowly-fucused (and unradical) book. Peter "Devine, James" wrote: how about Robin Hahnel's skinny book? Jim Devine [EMAIL PROTECTED] http://bellarmine.lmu.edu/~jdevine > -Original Message- > From: Peter Dorman [mailto:[EMAIL PROTECTED]] > Sent: Wednesday, October 30, 2002 9:54 AM > To: [EMAIL PROTECTED] > Subject: [PEN-L:31687] globalization text > > > Can anyone out there help me find a suitable book for an undergraduate > course that covers, among other things, "globalization"? The > ideal book > would have description of the main institutions, economic and > political > history since at least 1980, discussion of global economics > and economic > outcomes and linkages between economics, politics, and the other > dimensions (military force, race, gender, culture, etc.). > The political > stance is largely irrelevant, since the students will be > getting plenty > of PE theory and immersion in specific issues elsewhere. > > So far, I've looked at the new Tabb books (Elephant, Uneven Partners), > and I don't find nearly enough substance in them for students > new to the > topic. Last night I checked out recent books by Gilpin and > Scholte, as > well as a reader edited by Held and McGrew. Scholte and HM were much > too "soft": very little factual information, with mostly theoretical > debates of interest to globalization academics (is glob new or old, do > states have more power or less, what is the fate of postmodernism, and > so on). Scholte appears to have no background whatsoever in > economics; > the closest he comes is second-hand Marxism. Hence no significant > discussion of global finance, etc. As for Gilpin, there's > actually too > much economic material -- he's too detailed in his treatment of > technical questions in international economic negotiations. His > neoclassical mindset becomes a problem in that he foregrounds some > issues (like the putative imperative of overcoming > protectionism) at the > expense of others that need much more treatment (like alternative > development strategies). > > So none of the above are adequate. I'm open to other suggestions. > Again, I couldn't care less what the analytical bias of the author is, > so long as the relevant material gets covered. Students here (at > Evergreen) seminar on all their readings, and they will take apart > anything we put in front of them (usually). Other readings > have already > armed them for the task. A cogent right-wing text would serve our > purposes just as well as a more sympatico left-wing one -- and much > better than a flabby progressive text. > > You can reply offlist if you want, and I will summarize for > our vast and > growing public. > > Thanks, > Peter > >
Re: Request for comments on the debt crisis
I'm not an expert on it, but my sense of the literature on economic dualism is that the US is among the countries with the greatest disparity between small and large firms. Large firms live in a world largely sheltered from market risk (although see Ford); small firms are fully exposed with little support. It's as if there were a two-stage process: a darwinian struggle for start-ups and near-socialism for the big guys. Peter Michael Perelman wrote: I am including a short comment in a new ms. in a section on the rhetoric of risk. I would appreciate any comments, suggestions Walter Wriston once wrote: ##The men and women who founded our country were ... adventurers who took personal risks of the most extreme kind Today, however, the idea is abroad in the land that the descendants of these bold adventurers should be sheltered from risk and uncertainty as part of our national heritage At bottom, democracy itself rests on an act of faith, on a belief in individual responsibility and the superiority of the free marketplace. [Wriston 1986] People unfamiliar with Wriston's career might not fully appreciate the humor in his words. At the time he was writing, Citibank had only recently become deeply enmeshed in the Latin American debt crisis. Citibank was getting nearly 50 percent of its income from its loans to Latin America. The bank was intent on selling as much credit as possible to Latin America. It made these loans without much thought about the ability of Latin American to repay them. Citibank did not have to worry much about default. Later, the United States, in part through the IMF, forced a brutal austerity on Latin America to squeeze as much repayment as possible out of these loans. In short, the loans involved serious risk, but those who bore the brunt of the risk were the poor of Latin America who are still suffering the consequences. -- Michael Perelman Economics Department California State University [EMAIL PROTECTED] Chico, CA 95929 530-898-5321 fax 530-898-5901
Re: Bush Chavez: strange bedfellows?
Boy, is that NPR person off-base. Chavez is an OPEC militant who wants oil prices to go up. While the short run effect of an attack on Iraq would be exactly that, if the US sets up its intended protectorate, you can bet the spigot will be wide open. Could Chavez really be that dumb? Peter (back on pen-l but still totally frantic) "Devine, James" wrote: Today's "Morning Edition" on U.S. National Public Radio reported that Pres. Hugo Chavez has refrained from criticizing Bush in recent months (despite the U.S.-backed coup attempt) and speaks under a banner labeled "Venezuela and the U.S. More United Than Ever" (or something like that). He has not criticized the seemingly forthcoming attack on Iraq. According to NPR's reporter, it's because of convergence of interests surrounding oil. Jim Devine [EMAIL PROTECTED] http://bellarmine.lmu.edu/~jdevine
signing off
I'm signing off PEN-L for the spring, since I'll be on leave, and it's a bother to download large numbers of e-mail messages on my college's web-based mail server. If anyone needs to reach me for any reason, you can still send mail to me individually. Bon voyage, moi. Peter
Re: Nash game theory
I very much like the critique of Nash's approach in GAME THEORY: A CRITICAL INTRODUCTION by Hargreaves Heap and Varoufakis. As a very general statement, my main gripe with the mainstream economics appropriation of game theory is its fixation with solutions. Game theory is too abstract to have much value as a predictive machine, and what value is there to assuming a very specific set of rules, payoffs etc. just to get a particular outcome? I think the main point of game theory is to present a syntax for analyzing complex strategic interactions. Peter Ian Murray wrote: - Original Message - From: Justin Schwartz [EMAIL PROTECTED] But Nash Harsanyi made real contributions to economics. == For an excellent comparative critique of GT see Wolfgang Balzer's Game Theory and Power Theory: A Critical Comparison in Thomas Wartenberg ed. Rethinking Power.
Re: RE: Re: Systems of innovation
Interesting question. I just got back from a conference in which I hung out with mid-upper level policy-makers. I get the sense that there is an acceptable zone for economic policy from the vantage point of the permanent government, and that, for the most part, lobbying, bribery, etc. move decisions within that zone. In that respect economic policy is different from, say, enviro policy. Peter Devine, James wrote: I think there is a perception in Washington that US-based firms have a durable technological advantage in both financial and nonfinancial services, and that any measure that increases their scope and market access is good national economic policy. to what extent do our fearless leaders care about good national economic policy? I get the impression that everything is in terms of what's good for the most influential businesses, what fits with the ideology du jour (neoliberalism), and what won't cause a big public relations stink. Jim Devine
Re: Re: Re: RE: Re: Re: Re: Yen still overvalued
In this context I'm referring to the specific problem of changing over the installed capital stock. There is another restructuring problem in the CEE, which is more social (i.e. social relations of production) and has to do with disseminating a management system capable of competing with W. Europe. Again, this is not about what should take place in a better world -- simply adapting to the dictates of the existing capitalist context, under the (possibly false) assumption that countries smaller than the US have little leeway on these questions. Peter [EMAIL PROTECTED] wrote: Peter, What are you suggesting here? What kind of restructuring are you referring to? As someone who has spent the last 10 years studying and publishing on the Slovenian transition process, I'm mystified at what you are referring to. Paul Phillips, Economics, Universityof Manitoba 2. Except for Slovenia (where there was arguably not too much restructuring to perform), it hasn't been completed yet.
Sweatshops
The critique of the neoclassical argument is straightforward. We are not saying people would be better off in the informal sector or on the land than in a sweatshop. We are saying that there are other, repressed alternatives that are better than any of these. Hell, just unlocking the doors (so people don't get cremated on the job) and not firing women if they get pregnant is a superior, repressed alternative. Peter Doug Henwood wrote:A friend of mine who spent a few years as a reporter in Vietnam interviewed Nike workers who told her that they prefer their sweatshop jobs to what they would have been doing otherwise - things like chasing rats in rice paddies (not much fun to be a woman on the farm).
Re: Re: Yen still overvalued
Responses: Charles Jannuzi wrote: Peter Dorman Let me try another tack here. My understanding has been that Japan has been historically locked into a pattern of development characterized by high savings rates and high investment shares of GDP (the exhilirationist model). What do you mean by high investment shares of GDP? Aren't all developing countries that are growing rapidly (actually developing) like this? Japan went from worse than the Philippines in 1945 to a fully developed country by most standards by 1970. This historical fact, more than anything, was what was most appealing to other Asian countries looking for a development model. For one thing, it was the Japanese, not the Americans, who could understand where these countries were and where they wanted to go. Also, Japanese products and services often better fit these countries not for cultural reasons but just for the fact that Japan was a modern country with two living generations who had experienced and remembered disaster and grinding poverty (which might help explain the personal penchant for stressing savings in big banks and postal savings and insurance). How Americans in 2002 could say their town or family business benefited from a World Bank loan? I'm not saying the high savings -- high investment rates weren't warranted, just that this pattern can be difficult to maintain. Each validates the other, and both are made feasible by a large trade surplus: this prevents the high rate of savings from becoming a Keynesian burden and it generates the induced demand for investment. According to this view, Japan is in the midst of a protracted adjustment crisis, which can either be explained by increased competition with other east Asian exporters for the available (i.e. US) markets, or by the maturation thesis, according to which domestic consumption can no longer be constrained and the economy loses its export advantage. This obsesses on exports as if they were something other than just something you shipped and sold overseas for a loss or profit. They are not the key to understanding deflation or lack of profitability in the domestic economy. The Japanese didn't lose the car market in America to cheap exporters from Asia. Rather, the high yen squeezed their profits on the quotas they have been allowed to sell in the American market. Meanwhile, profits have always been limited in Japan in cars because of the intense competition among all the Japanese producers of cars. Take away automobiles and parts and some very advanced electronics, and Japan runs trade deficits with the rest of the world. Yet no where in the developed world even has it been agreed that by principles of free trade these industries should be surrendered to Japanese dominance. In fact, quite the opposite is the case if you track trade policy and its results from about Reagan II onward. My comment was not about profits but the adequacy of effective demand. High investment leads to high capacity which requires high demand. If it ain't domestic, it comes from net exports. In recent years Japan has run bilateral trade deficits with several east Asian countries, no? In either case, much of the capital stock is revealed as misinvested -- and this on top of the bad bets made during the bubble period. If companies and their banks can't decide what is and what is not well invested, who can? God? Also, what is normally a good bet in a modestly growing economy can be something quite different in a recession, don't you think? Yes, that's my point. With changing sources and patterns (and levels) of demand, investments that made sense during the planning phase can be revealed as mistaken ex post. The Japanese system of pooling financial risk supposedly slows down the adjustment process; hence the outside calls for restructuring via write-offs and default. I think if you could think like an 'analyst' at an investment bank in Tokyo (most linked to interests in the US) you would see the calls have nothing to do with a slow Japanese adjustment process and the ineluctable need for 'restructuring' but rather the need to find profits now that the North American equity market is flat. I say Japanese companies operating on microeconomic principles not much different than what Americans or Europeans are used to have restructured and altered radically in the past decade. Perhaps far more radically than anything that's been going on in North America or Europe. This hasn't miraculously turned around the non-growing economy or deflation. There is debate about this, as I understand. The question I've seen posed is, how can you accelerate the writeoff of nonperforming loans if doing so would erase the equity position of much of the banking system? I realize there are powerful vultures out there, but that doesn't mean that any critical analysis of Japanese financial practices is purely self
Re: Systems of innovation
There are definitely elements of this. I think there is a perception in Washington that US-based firms have a durable technological advantage in both financial and nonfinancial services, and that any measure that increases their scope and market access is good national economic policy. This would go against what I said back in '98. It's too soon to say for sure, but my hunch is that no such advantage can be durable any more. Also, one of the questions people are asking post-Enron is to what extent the apparent advantages of US corp's was an artifact of devious accounting practices. Peter [EMAIL PROTECTED] wrote: G'day Peter, You write: Right. I argued in Actually Existing Globalization (published in a collection a few years ago) that industrial policy is ultimately understandable only as technology policy, but that the era of national technology (or innovation) systems is largely over. At the time I reviewed some of the literature pro and con; I think there are some references in my article. I'll be glad to send an electronic copy to anyone interested. Peter I've not seen the paper (and I'd really like to ... ), but I'd argue the US has exhibited many signs of an almost mercantilist corporatist policy approach to optimising intial advantage in IT - pushing TRIPs into the Uruguay Round, allowing anti-competitive mergers and such to ensure world-beating economies of scope and scale, pressuring the rest of the world into abandoning public telecommunications backbones - in fact - policy timing, from the ATT transformation, to fighting off Japanese HDTV standards, to the shift of the public/private internet debate in the early nineties, to letting the money-rich but opportunity-poor BabyBells off the leash in '96, to allowing media monoliths to consolidate across media in '02 - well, it all looks like a technology policy of sorts - perhaps at a structural (diffusion and control) rather than technical (invention and innovation) level (the DoD drove a lot of the latter before the end of the space race and Vietnam War occasioned a need for civvie market opportunities, in the context of the post '73 dip in national competitiveness and national accounts all 'round), but arguably a technology policy nevertheless. Or not? Cheers, Rob.
Re: RE: Re: Re: Re: Yen still overvalued
We shouldn't underestimate the problem of shifting the structure of production. This was the same problem (only on an even larger scale) faced by the east Europeans, and it was accomplished through massive downsizing. But there are two points to bear in mind: 1. The equity writeoffs accrued to compliant state owners, not capitalists with the means and will to resist, and 2. Except for Slovenia (where there was arguably not too much restructuring to perform), it hasn't been completed yet. (None of the above should be construed as an endorsement of the particularly restructuring going on in the CEE countries. I offer it simply by way of example and to suggest why Keynesian methods alone are not sufficient.) Peter Devine, James wrote: Gil writes:The interesting question, in light of Peter's assessment, is why the Japanese government can't use traditional Keynesian fiscal tools to pull itself out of the recession. 1) the IMF and the assembled economic pooh-bahs argue against it. 2) they've already done it a lot, building a lot of infrastructure, much of it useless, but never enough to get the Japanese economy moving again. 3) they don't want to get into raising government consumption (building pyramids, as Keynes suggested) and they're still restricted from doing Military Keynesianism. But that doesn't mean that fiscal policy couldn't be used. My idea is that they should stimulate the Japanese economy by giving foreign aid to poor areas (such as East St. Louis, IL) that's tied, i.e., can only be spent on Japanese goods. This is what the U.S. did for many years. Jim Devine [EMAIL PROTECTED] http://bellarmine.lmu.edu/~jdevine
Re: Re: Yen still overvalued
Let me try another tack here My understanding has been that Japan has been historically locked into a pattern of development characterized by high savings rates and high investment shares of GDP (the exhilirationist model) Each validates the other, and both are made feasible by a large trade surplus: this prevents the high rate of savings from becoming a Keynesian burden and it generates the induced demand for investment According to this view, Japan is in the midst of a protracted adjustment crisis, which can either be explained by increased competition with other east Asian exporters for the available (ie US) markets, or by the maturation thesis, according to which domestic consumption can no longer be constrained and the economy loses its export advantage In either case, much of the capital stock is revealed as misinvested -- and this on top of the bad bets made during the bubble period The Japanese system of pooling financial risk supposedly slows down the adjustment process; hence the outside calls for restructuring via write-offs and default If this is true, the problem shows up in Keynesian fashion (reduced net exports), deflationary pressure (competition with lower-wage producers in the region), and persistent financial fragility Comments? Peter
Re: Systems of innovation
Right. I argued in Actually Existing Globalization (published in a collection a few years ago) that industrial policy is ultimately understandable only as technology policy, but that the era of national technology (or innovation) systems is largely over. At the time I reviewed some of the literature pro and con; I think there are some references in my article. I'll be glad to send an electronic copy to anyone interested. Peter Bill Rosenberg wrote: Is anyone familiar with the National Systems of Innovation approach to economic development? The Labour/Alliance government has announced an economic strategy which is said to owe much to this. I understand that Chris Freeman (UK), Bengt-Åke Lundvall (Denmark), Charles Edquist (Sweden) and Richard Nelson (New York) are leaders in the field. Any views would be welcome. Bill
Is there a left program at the global level?
At first, I was irritated by Uchitelle's assertion that concrete proposals for change are not coming from the streets but from more moderate types like Dani Rodrik. But then I thought about it, and it seemed to be more or less correct. The excellent critiques of the existing system usually end with a brief wish list of desired outcomes but not actual proposals, or where there are proposals they are disappointingly nonradical. (Perhaps the only exception is the demand for widespread debt relief, but isn't this also defined in terms of the outcome and not the concrete mechanism?) I'd like to be wrong. I would love to say that our side has carefully thought-out demands to fight for, and that the problem is just that they are being ignored or blacked out. Please convince me that this is so. (And, no, the Tobin tax does not qualify as a radical proposal.) Peter Ian Murray wrote: [NYTimes] February 9, 2002 Challenging the Dogmas of Free Trade By LOUIS UCHITELLE snip The anti-globalization protests, including the protests near the Waldorf last weekend, have rallied tens of thousands of people against globalization and above all against its laissez-faire guiding principle. But the alternative visions that are beginning to be offered are not coming from the streets. They are coming instead from Mr. Rodrik, a professor at Harvard's Kennedy School of Government, and a handful of other economists, sociologists and political scientists.
Re: Export tax subsidies that aren't?
Well, we have theories of speculative dynamics in asset markets, and we have case studies in policy outcomes for countries facing BOP/forex issues, and there are Thirwall's Post Keynesian Lance Taylor's structuralist approaches. Am I missing anything? The main point, though, is that there is a defensible notion of competitiveness on a national level, and that cost-changing measures (subsidizing exports, assassinating union leaders) are not simply offset by exchange rates; they have impacts on aggregate flows. Peter Max Sawicky wrote: In a world in which transaction demand on the current account was the sole basis for forex markets, with constant PPP and never a whiff of pricing to market, then this type of analysis would make sense. We're not in that world, however. Peter AND . . . . ??? mbs
Re: Re: RE: Export tax subsidies that aren't?
In a world in which transaction demand on the current account was the sole basis for forex markets, with constant PPP and never a whiff of pricing to market, then this type of analysis would make sense. We're not in that world, however. Peter Michael Pollak wrote: On Wed, 30 Jan 2002, Max Sawicky wrote: The mainstream argument is that exchange rates adjust to wash away all tax advantages, whether legal or illegal. Not being a trade person, the best argument I can think of goes like this: If you want to buy US goods, you need dollars to pay for them. A cost reduction in said goods [due to tax rebates for exports] increases demand for dollars relative to other currencies, Wouldn't a decrease in the total cost of goods lead to a *decrease* in the demand for dollars? In which case, the rest of the mechanism: cost of dollar (and good, in importer's currency) go up, cost advantage disappears. would be thrown into reverse, and the currency swings would reinforce the effect of the original subsidy. Michael __ Michael PollakNew York [EMAIL PROTECTED]
Re: RE: Re: RE: Export tax subsidies that aren't?
Max, this is governed by the, ahem, Marshall-Lerner conditions: the sum of import and export price elasticities must be greater than one. People who study such things say the conditions are always met, but the structuralist tradition holds that they are met only within limits. This is something I've always wanted to look at but never got around to. Peter Max Sawicky wrote: Depends on the price elasticity. If the price of jellybeans goes down, do you spend more or less on jellybeans? But I should beg off on this. I don't do trade. --mbs Wouldn't a decrease in the total cost of goods lead to a *decrease* in the demand for dollars? In which case, the rest of the mechanism: cost of dollar (and good, in importer's currency) go up, cost advantage disappears. would be thrown into reverse, and the currency swings would reinforce the effect of the original subsidy. Michael __ Michael PollakNew York [EMAIL PROTECTED]
Re: World Economic Forum
Right, and meanwhile the politicians from mainstream social democratic parties are hobnobbing with the World Social Forum in Brazil. What does it take to some real contestation these days? Peter Devine, James wrote: today's L.A. TIMES op-ed column by Arianna Huffington (not available on-line yet) makes it sound like the WEF in NYC is just a talk-shop, co-opting some of the outsiders who had demonstrated against such meetings in the past. Forum organizers had disinvited Ken Lay but invited community activist Van Jones, who was teargassed in Seattle protesting the World Trade Organization and hit by a police car in Washintone [DC] protesting the International Monetary Fund. In fact, they honored Jones as a 'global leader for tomorrow.' Going along with such co-optation, I am sure, is a disappearance of any real power that may have existed for the WEF. If there were any substantive decisions being made in the past, I'd bet that they've shifted over to some much less public venue. Jim Devine
Re: Re: Free Trade Game
You got it. Peter Robert Scott Gassler wrote: Sounds cool. How do I get one? Scott At 20:31 31/01/02 -0800, you wrote: I am able to announce, at long last, that I have finished the shipping version of Rice and Beans, a game I developed to demonstrate the critique of orthodox trade theory and its significance for the trade/environment debate. (The same critique is easily extended to the trade/labor debate.) The game is not especially fun to play -- it consists of six rounds, each illustrating a trade-and-regulation scenario -- and a lot of numbers get concocted and added up, but it does take players rather far into a stylized Post Keynesian universe (unemployment, imbalanced trade) in which a race to the bottom is a real possibility. It is suitable for groups of 10-50 or so, and it takes about two hours to play, including the final discussion. It has been classroom-tested. (Please, no criticism from People for the Ethical Treatment of Students.) The game is contained in three files, available as WordPerfect or pdf: a six-page handount distributed to all players, one-page forms for players playing key roles, and a three-page user guide. Ask (offline) and ye shall receive. Peter User Guide.pdf Description: Adobe PDF document Handout.pdf Description: Adobe PDF document Forms.pdf Description: Adobe PDF document
Re: Re: Re: Free Trade Game
Oops. I apologize to the assembled multitude -- didn't check to see whether the message was off-list. Peter Peter Dorman wrote: You got it. Peter Robert Scott Gassler wrote: Sounds cool. How do I get one? Scott
Free Trade Game
I am able to announce, at long last, that I have finished the shipping version of Rice and Beans, a game I developed to demonstrate the critique of orthodox trade theory and its significance for the trade/environment debate. (The same critique is easily extended to the trade/labor debate.) The game is not especially fun to play -- it consists of six rounds, each illustrating a trade-and-regulation scenario -- and a lot of numbers get concocted and added up, but it does take players rather far into a stylized Post Keynesian universe (unemployment, imbalanced trade) in which a race to the bottom is a real possibility. It is suitable for groups of 10-50 or so, and it takes about two hours to play, including the final discussion. It has been classroom-tested. (Please, no criticism from People for the Ethical Treatment of Students.) The game is contained in three files, available as WordPerfect or pdf: a six-page handount distributed to all players, one-page forms for players playing key roles, and a three-page user guide. Ask (offline) and ye shall receive. Peter
Re: Re: strong dollar
Personally, I wouldn't jump to realist conclusions. It's not at all clear to me that Europe and Japan want to face the crises that would follow a precipitous fall in the dollar. Peter Chris Burford wrote: At 28/01/02 20:28 -0800, Peter Dorman wrote: In the narrow sense, the strength of the dollar can be attributed to the weakness of other currencies, especially the yen and the euro. The downward pressure on those two will continue for some time, I think. If there were a viable rival to the dollar, fundamentals (the chronic US current account deficit) would express themselves much sooner. Does that not mean it is in the interests of Europe and Japan to start creating, no doubt by stealth, an alternative to the dollar as world money? That would mean that the relative advantage of having your currency as world money, is shared out. In a larger perspective, US foreign policy has been run to create the structural conditions for continuing the dollar as the reserve/key currency. It's not so simple, of course, but I think that's the main effect. If/when the dollar falls, it will set off a political crisis of succession as severe perhaps as the economic crisis. Europe and Japan will presumably have to take advantage of this under cover of international cooperation. Could they be willing to let their currencies fall until the point at which this undermines the advantages that the USA gets from its strong dollar policy? Then would they have reforms ready that would change the system, or just make minor repairs so it essentially continues with the mechanisms of unequal exchange. I suspect that talk about international development of poor countries may be a proxy for this power play about the shape of the world economy. Chris Burford London
Re: strong dollar
In the narrow sense, the strength of the dollar can be attributed to the weakness of other currencies, especially the yen and the euro. The downward pressure on those two will continue for some time, I think. If there were a viable rival to the dollar, "fundamentals" (the chronic US current account deficit) would express themselves much sooner. In a larger perspective, US foreign policy has been run to create the structural conditions for continuing the dollar as the reserve/key currency. It's not so simple, of course, but I think that's the main effect. If/when the dollar falls, it will set off a political crisis of succession as severe perhaps as the economic crisis. I agree that it is good to be hawkish on worker rights and to recognize that this is just a small piece of the larger package bearing down on workers in the North (and South). My guess is that the two biggest pieces are the permanent debt overhang (and associated addiction to trade surpluses and inward capital flows) in the third world, and the "liberation" of financial capital from national regulation. But the importance of the global collapse of the political left (left parties in power or contending for power) should not be discounted. (The rightward shift of the social democrats such that they are no longer really "left" is one aspect of this collapse.) This collapse is a result of the economic context, but it also contributes to it. My whirlwind version of a much longer argument... Peter "Stephen F. Diamond" wrote: Isn't the strong dollar the effect of foreigners continued, increasing willingness to invest in dollar assets, as indicated by the 4-500 bn. net capital inflows into the U.S. economy per annum over the last couple of years? This would seem to contradict the idea the impact of China. I tend to think of China, for example, as having a deflationary impact on certain narrow strands of the economy, particularly characterized as having reached near-commodity like production standards requiring relatively less sophisticated labor. Though I am a hawk on advocating international labor rights, particularly in China, I am not in agreement that that is somehow the most dominant issue facing organized labor in the U.S. or Europe, relative to the dramatic restructuring of the jobs that remain and in light of the fact that something like 70% of cross border capital flows are between the triad countries.
Re: precautionary principle
Thanks for the plug, Jim. At another point in the manuscript, I mention in passing the role of Frank Knight in developing the distinction between risk and fundamental uncertainty. Knight's claim was that entrepreneurship is the specialty of people with an abnormal tolerance for plunging into the unknown. The system depends on the supply of such entrepreneurs who will put their (or other folks') money on the line, even when accountants haven't a clue what's going on. In the case of Enron, however, the murky accounting appears to have been deliberate. All debate over Knightian entrepreneurship aside, there is no evidence of it here. (The more that comes out, the more the whole business begins to look like a vast, interconnected Ponzi scam. Look at the story in the NYT today about the secret investment fund marketed on Wall St., which paid dividends out of all proportion to the actual underlying returns.) Peter Devine, James wrote: reading a manuscript, I came upon the precautionary principle, defined as saying that when an activity raises threats of harm to the enviornment or human health, precautionary measures should be taken even if some cause and effect relationships are not fully established scientifically (from the Wingspread statement of 1998). (pen-l's Peter Dorman had an interesting paper on this subject at the recent URPE@ASSA conference.) The Enron and dot.con melt-downs suggest that a similar principle should be applied to accounting (in the face of new corporate forms that stretch traditional accounting norms). But can capitalism -- which centers on the aggressive accumulate-to-compete or compete-to-accumulate principle -- ever follow any precautionary principle without strict governmental restrictions? Jim Devine [EMAIL PROTECTED] http://bellarmine.lmu.edu/~jdevine
Re: RE: precautionary principle
Mat, How do you deal with the argument that the apparent tradeoff between growth (or full employment) and the environment is due to the failure of full cost internalization? The standard neoclassical position is that, for markets to function properly, they have to reflect true social costs and benefits. Without the polluter pays principle in effect (ideally enforced through markets for eco-externalities), we don't have a true market solution. I have my own problems with this argument, but I wonder what your take is? Peter Forstater, Mathew wrote: Jim, I have thought about this recently and come to the conclusion that, first, unregulated or badly regulated capitalism is both macroeconomically unsatisfactory and environmentally unsustainable. Second, traditional policy approaches to both unemployment and environmental degradation are insufficient to achieve either satisfactory macro outcomes (e.g., full employment) or ecological sustainability. Moreover, policy approaches addressing either one of these (either full employment or environmental sustainability), even if successful, actually in most cases exacerbate the other one. So, e.g., attempting to achieve full employment through stimulating aggregate demand if successful would probably increase resource depletion and pollution. So it may be that 'sustainable capitalism' really is an oxymoron. Mainstream economics usually says that problems like discrimination or environmental degradation are due to market forces (e.g., competition) not being strong enough or associated institutions (e.g., private property) not being widespread enough. But it is much more likely that, as you suggest, these are the normal outcomes of a capitalist system. So the government intervention necessary to address these problems would probably be of a kind and of a degree that the resulting system would be something many would not define as capitalism. So the questions really come back to those that have long been at the heart of debates concerning socialism and communism and even various forms of anarchism: Is there any role for markets at all in a post-capitalist economy? Is there any role for money in a post-capitalist economy? Can a post-capitalist economy be attained without violence? Would a socialist society *necessarily* be environmentally sustainable (or non-racist or non-sexist)? And so on. Mat
Re: RE: Re: RE: precautionary principle
Thanks! Could you post some specific references for Ravetz and Funtowicz? I agree with a lot (I think most) of the specifics you raise, but such a diffuse critique runs the risk of not communicating itself beyond the small circle of people who go through the whole thing systematically. Is there a bumper sticker version? Peter Forstater, Mathew wrote: Hi Peter - I have taken a multi-pronged approach that includes arguments about valuation problems (criticisms of contingent valuation, travel cost, and other methods); an alternative view of social costs based on Kapp's work that includes cumulative causation; critique of optimality notions based on preferences, productivity, and profitability (all narrowly defined) and the inability of cost-benefit solutions to fully consider what I call biophysical conditions for a sustainable economy; critiques of neoclassical-Coasian-'tragedy of the commons' notions of 'property' and historical evidence concerning forms of property and the social institutions that mediate resource use; knowledge problems concerning human impact on the environment under conditions of radical or fundamental uncertainty (do you know the work of Ravetz and Funtowicz, by the way, some of the best stuff on this I know of?); alternative theories of price and value and critiques of neoclassical price theory; emphasis on the distinction between cost-benefit and cost-effectiveness analyses; etcetera, etcetera, etcetera. If by the time I'm done my opponents are not convinced, at least they are worn out or asleep. I admit that I have made some mistakes in the past (wow!) and have had to modify some of my claims. Once when I was giving a job talk for a position that was a joint appt in economics and environmental studies, after a long day of individual and group interviews with faculty and students of both programs, after going through all the above, elaborating during a long q and a period, someone in the audience asked me: but why does it matter if humanity survives [or survives longer than the amount of time it will take to wear out the earth if we continue on the present path]? Mat
John Culbertson
I'd like to put in a word for John Culbertson, whose death was reported today in the New York Times. John was one of two economics faculty who influenced me when I was an undergraduate at the University of Wisconsin -- without them, I doubt I would have had any interest in advanced study. I worked independently with Culbertson, who by that point (mid 1970s) was a Wisconsin Institutionalist, in spirit if not by self-identification. He was open-minded and willing to hear me out, no matter how unorthodox my take on the subject matter. Naturally, he existed at the margins of the department -- all the flurry of grad student activity bypassed his office, which was filled with books on history and politics as well as economics. His style was calm, reflective and perpetually curious. It's good he was part of the generation that entered the economics profession in the 1940s and 50s. There's no room for his kind any more. Peter
Re: Re: RE: Re: Project for Pen-l
More generally, pricing to market is an important aspect of the critique of trade theory. There is plenty of empirical evidence for it, although the theory is underdeveloped. Assuming that this is a tool that can be used by global oligopolists, its effects are likely to be asymmetric, as Michael says. Peter Michael Yaffey wrote:Gains may be assymetric because in manufactured goods there is much more chance of manufacturers controlling prices down the chain, certainly to the cif level and maybe even retail, whereas farmers do not succeed in doing that. I did a survey on import price determination in Tanzania once in this very framework. In such a situation there is no possibility of free trade based on comparative advantage. The choice is between what I might call hegemonic free trade and intervention in the sectors concerned. What Peter has in mind is really a special case. Michael Yaffey
Re: Addition to last post...
Ken Hanly wrote: The second defense, pursued by Hicks (1941), was that even if the losers do not get compensated in the move, they might still benefit in the long-run if the criteria were followed consistently by society. This argument is similar to that of trickle-down theory and in arguments for free trade: some people may be worse off in the short-run, but in the long run, everyone will be better off.The underlying assumption, of course, is that at some point, those who lost utility initially will come across a possible move in which they benefit and a society which follows the Kaldorian rule will move to it and thus they will gain in the end.Of course, as Little (1950) notes, this is completely hypothetical. There is nothing to guarantee that there will eventually be a move in which the initial losers will be the ultimate winners. My understanding is that this argument takes the following form: We conduct many policy analyses. In any given analysis, there is no justification for acting on the potential pareto principle. But as long as the beneficiaries of all the various policies are more or less evenly distributed across society, the combined result of applying this principle is to achieve something close to pareto optimality. People who say this imply that the burden of proof is on critics to demonstrate that the same folks tend to be on the winning side across the policy universe. It seems clear to me that having lots of money and therefore running up the market value of your preferences is exactly the sort of systemic bias that undermines this argument. Peter
Re: free trade CORRECTED YET AGAIN
For a more elaborate version of this critique, see the work of Metcalfe and Steedman (lots of articles from the 1970s). In this instance, it isn't clear why (a) absolute advantage is invoked or (b) what the criterion is for evaluating trade. (a) Comparative advantage depends on exchange rates in any model with wages (such as this). (b) The case for comparative advantage is potential pareto improvement relative to autarchy. Why doesn't this apply here. (Note: advantage for capitalists is not the criterion; rather, trade theory depends on a calculation in which society is treated like one giant ant colony.) Peter Rakesh Bhandari wrote: oops i made another small error; here's the corrected version. i basically had to change the entry for English cloth production in my example of hours paid. sorry for the confusion. i am sure much better examples, with real perverse results, could be developed to make the point that I am trying to get across. Back to work. Taking my inspiration from Carchedi's For Another Europe. Ricardo's comparative advantage in terms of HOURS OF LABOR Port Eng Wine 80120 Cloth90100 So it is more convenient for England to produce 2 units of clothing (for a total cost of 200 hours) and trade one unit of clothing for one unit of Portuguese wine. But let's now introduce Marx's concepts of the composition of capital and labor power. So let's say that in england t that capitalists only pay workers for half the labor that they perform--suppose that there is a huge reserve army of labor and maximum wage laws to boot and no exploitation in Portugal. That is, the v advanced in England is only half the labor actually performed; the rate of exploitation is 100%. Marx's comparative advantage in terms of HOURS OF LABOR PAID. PortEng Wine 80 (40c + 40v)75 (30c + 45v) Cloth90 (50c + 40v)75 (50c + 25v) We can see that if English capitalists pay for the actual hours of labor performed, then England needs 120 hours for a bottle of wine (30 c + 90 v) and 100 hours (50c + 50v) for a piece of cloth. But the British masters actually only pay for 75 hours (30c + 45 v) and 75 hours (50c c + 25v) in the production of wine and cloth respectively. Now absolute advantage shifts to England. For Portugual it would still be convenient (or labor saving) to produce 2 units of wine and trade one bottle for a unit of English cloth. But for the English capitalists there is nothing to be gained any longer from comparative advantage. In fact given the short term transitional costs implicit in a shift to an all cloth economy the english capitalists would suffer a net loss by specialized trade around the principle of comparative advantage. Ricardo should have recognized that the exploitation of labor can prove to be an impediment to the rational saving of labor by means of trade. But he did not develop the distinction between labor and labor power. Rakesh
Re: Re: Re: free trade CORRECTED YET AGAIN
What you need to show is that, at an exchange rate that permits balanced trade, there is not a set of voluntary trades (willingly entered into by the owners of the respective commodities) that would produce a potential pareto improvement in at least one country with no potential pareto loss in the other. In pure production models (without relations of production), the implicit exchange rate is 1:1 in labor hours. As soon as you distinguish between hours of work and commodity price (due to variable rates of exploitation), you need to specify the exchange rate explicitly. Incidentally, it is not necessarily the capitalists who trade. The capitalists may sell their output to trading houses which then engage in trade (as was the Japanese case). If your model is properly specified, this should not make any difference. Peter Rakesh Bhandari wrote: What I am saying is that there is the possibility that trade that would deliver potential pareto improvement from the perspective of social labor may not have any such benefits for the capitalists. Is it possible to show this? Rakesh
Re: Re: Re: Re: Re: free trade CORRECTED YET AGAIN
Rakesh, Could the Portuguese workers' collectives agree to exchange their wine for slightly labor hour equivalence in British cloth? This would still enable them to procure their goods at slightly less labor cost. And would the British owners of cloth agree to this, seeing that they would come out slightly ahead? By the way, the point about trading companies was simply to emphasize that the Ricardian moment is one of pure exchange; profit in production is not at issue. (Note: this is Ricardian trade theory only. There is some allowance for production in the 20th century version.) Peter
Re: RE: project for Pen-l
Eric, I agree that the static case for free trade (in mainstream theory) provides a one-time only increase in income. There is also a dynamic case, which we haven't discussed here, and which mainstreamers have come to rely on as the main argument. The dynamic boost (whatever it might actually be) is viewed as ongoing. And I agree completely that the pattern of trade is not in dispute -- you would see approximately the same pattern with or without comparative advantage (which is to say without or with absolute advantage). Mainstream empirical work does not distinguish between these two. (But empirical work on forex markets does falsify the assumptions about price equilibration, no?) We are really concerned with the effects of trade liberalization, both in the narrow economic sense (macro instability for instance) and the broader political-economic sense. I think we are on the same page. Peter [EMAIL PROTECTED] wrote: Mainstream theory does not necessarily claim that free trade should lead to a higher growth rate; at best it indicates a one-time increase in output due to reallocation of production internationally. By a fundamental challenge (referred to by Peter) is it meant that a fundamentally different theory of the EFFECTS of trade or a fundamentally different theory of the causes of the PATTERN of TRADE? Or both? The (potentially detrimental) effect of international trade on domestic economic and non-economic institutions are what I am most concerned about. Eric
Re: RE: project for Pen-l
Applied economics is based almost entirely on the potential pareto principle. A prime example is cost-benefit analysis. Peter [EMAIL PROTECTED] wrote: Ken writes, I'm not an economist but my understanding of traditional welfare economics is that there would be an increase in welfare as long as there is a potential pareto improvement. By definition a pareto improvement helps some and doesn't hurt anyone. Only actual pareto improvements clearly improve welfare. Potential pareto improvements are not welfare improving. Saying that the gains exceed the loses and, so, that social welfare improves requires, first, interpersonal utility comparisions and, second, that you make more-or-less arbitary assumptions about how to weight individual utilities to aggregate up to a social welfare function. Interpersonal utility comparisions have been rejected by mainstream welfare economics for decades. Arbitary weightings of individuals' utilities functions are, well, arbitary and unsupported by any aspect of mainstream welfare economics. Others on the list are more knowledgeable about mainstream welfare economics and I hope they correct me if I'm wrong. Eric
Re: RE: project for Pen-l
My list: 1. Comparative advantage, if correct, refutes the race to the bottom idea. It is a very powerful concept. 2. Moreover, if comparative advantage is correct, those who understand it have a moral imperative to shout down, buy off or otherwise overcome the resistance of those who oppose free trade. It is a theory with a mission. 3. The case for free trade (and comparative advantage) is, in the end, the same as the case for free markets in general. 4. The arguments against free markets (market failure, path dependence) are, for the most part, also arguments against free trade. 5. Comparative advantage relies on stringent assumptions regarding the trade account which are falsified by experience. In the real world, advantage is likely to be absolute. Thus the criticisms of labor and environmentalists have merit after all. 6. The financial mechanisms that are responsible for advantage not being comparative are also responsible for free trade systems being macroeconomically unstable. In other words, chronic trade imbalances exacerbate destabilizing capital flows. 7. There is an important counter-tradition in economics associated with nationalist trade policy. It begins in the US with Hamilton, continues with List (Germany) and includes 20th century Japanese policy. It is different in important respects from the newer social critique of free trade. 8. Modern trade agreements are about much more than trade. They are wide-ranging attempts to commoditize as much of the economic sphere as possible. This is an ambitious list. I can get to most of this in a two-quarter program in political economy, but in other situations I have to pick choose. My rice and beans game, for example, really addresses only 1 and 5 (with a tad of 6). Peter [EMAIL PROTECTED] wrote: Peter wrote, An alternative approach would be to think about the general concepts we would like our students to take with them (i.e. a useful and mostly correct theory of trade) Okay, Peter, spill the beans ... what general concepts do you think students need to know? If I had a list it would likely include: -every international trade change leads to winners and losers; -institutions that can be constructed within a single domestic country can be undercut when a move to free trade occurs. Some of these institutions promote social justice; -exchange rate changes that are unrelated to anything fundamental can cause big changes in the pattern of trade; -capital is generally much more moble than is labor. This can have big consequences for the bargaining power between K and L -In an era in which businesses are so internationalized, it is not clear that US citizens benefit from supporting businesses than happen to be headquartered in the US. (Link to Reich's article Who is Us?) Eric
Re: RE: project for Pen-l
Is there anything else the mainstream has mentioned as a source of dynamic benefit to trade? I'm not sure that much empirical evidence supporting these claims have been offered. The main argument, at least for developed economies, seems to be the beneficial effects of competition. LDCs are supposed to benefit from technology transfer. There is a huge literature on this, which I haven't pretended to keep up with. (Unlike the other literatures I do pretend to keep up with...) I've made a rather different argument, that technology has become international in a sense that has little historical precedent. The training of engineers, the types of equipment used, and so on, has been largely standardized. Techniques bounce back and forth in an almost frictionless way across borders. The division of labor in innovation (the interconnected flow of process and product innovations) is also international. Thus a high degree of openness is a precondition for participating in the technologically advanced sectors of the economy. This is an inescapable argument for a certain type of liberalization, although it doesn't follow that unmanaged trade is a good idea, either nationally or globally. I sketched some of the evidence for this view in an article I wrote several years ago, Actually Existing Globalization. We are really concerned with the effects of trade liberalization, both in the narrow economic sense (macro instability for instance) and the broader political-economic sense. I'm with you on that. However, I think a good argument can be made that institutional differences between countries can shape the pattern of trade. Yes, you've studied that, so I'll defer. But can your approach be distinguished empirically from the neoclassical endowments-and-preferences model? Eric Peter
Re: RE: project for Pen-l
I realize that the non-compensation angle is one that can be pursued. It has the advantage of gaining sympathy from the more humane wing of mainstream econ. I think it concedes too much, however, and politically it is not too convincing. We are essentially saying, according to this argument, that economic growth should be slowed because we haven't succeeded in compensating the losers from growth-enhancing policies. People will say, instead of shooting yourself in the foot, why not enact the right trade policies and then institute programs for displaced workers, etc.? (I once had a job writing checks under the Trade Readjustment Act, which did exactly that, albeit not enough.) I advocate making a more fundamental challenge. Peter [EMAIL PROTECTED] wrote: How can one rebut the claim that free trade is the best policy? A purely internal critique of this claim: Mainstream theory itself argues that free trade is the best policy only if very specific conditions exist. If these conditions do not exist, then mainstream theory indicates that we can't say that free trade is the best policy. For instance, mainstream trade theory indicates that any move to free trade will lead to some people losing out. Mainstream theory also makes clear that unless those who lose from trade are fully and completely compensated for their losses, then free trade does not benefit a nation. That is, mainstream theory does not say that free trade is the best policy. Rather, it says that free trade plus the full compensation of those who have lost out is the best policy. Eric
Re: what's the point?
An alternative approach would be to think about the general concepts we would like our students to take with them (i.e. a useful and mostly correct theory of trade) and then spend too much time trying to figure out a way to bring these concepts down to the introductory level, using case studies, games and simulations, etc. That's how I do it... Peter [EMAIL PROTECTED] wrote: Peter Dorman asks: But then what's the point, Jim? That neoclassicals have a better handle on stuff than Ricardo did? I'm sure you don't mean this, but I don't know what you do mean. The point depends on one's purpose: if one is simply doing theoretical and/or empirical research in trade theory, I agree that Ricardo should be dumped. On the other hand, if one has to present a simple trade theory to undergraduate students, who are totally opposed to anything that smacks of theory or abstraction (especially the biz majors), I see nothing wrong with starting with Ricardo, presenting such stuff as the role of migration dynamic comparative advantage. BTW, one can use Ricardo to discuss Shaikh. Jim Devine _ The simple way to read all your emails at ThatWeb http://www.thatweb.com
Re: RE:Re: what's the point?
There really isn't a good book, at least none that I know of. I will take specific horror stories that advocacy groups tell -- runaway plants, sweatshops, etc. -- and try to get students to work through them theoretically. (What is the mainstream economics story? What specific outcomes would you expect to see if that story were true? What seem to be the weak links in that story? What other story would make sense of the example, be logically consistent, etc.?) I also have a game, rice and beans, which I've mentioned on this list before. I'm going to be revising it again for my class next quarter; it's still rather cumbersome and difficult to play in a 1 1/2 hour time frame. The game illustrates the consequences for a country's economy and its environment of a switch in the rules of the game from comparative to absolute advantage based on different assumptions about international borrowing. Peter [EMAIL PROTECTED] wrote: Peter writes:An alternative approach would be to think about the general concepts we would like our students to take with them (i.e. a useful and mostly correct theory of trade) and then spend too much time trying to figure out a way to bring these concepts down to the introductory level, using case studies, games and simulations, etc. That's how I do it... I'd like to see how you do it. what book do you use? -- JD _ The simple way to read all your emails at ThatWeb http://www.thatweb.com
Re: RE:Re: RE: project for Pen-l
Right, Jim. I think you've just rediscovered social democracy ;) Peter [EMAIL PROTECTED] wrote: Peter writes:I realize that the non-compensation angle [i.e., that the global gains from trade correspond to losses by many and the latter are never given the compensation that they could to make up for those losses] is one that can be pursued. It has the advantage of gaining sympathy from the more humane wing of mainstream econ. I think it concedes too much, however, and politically it is not too convincing. We are essentially saying, according to this argument, that economic growth should be slowed because we haven't succeeded in compensating the losers from growth-enhancing policies. a thought: one way of thinking of Marx's theory of exploitation is as a theory of non-compensation, i.e., the non-payment of workers in compensation for their losses when capitalist relations of production (not just markets) change, even those that compensation could _in theory_ be paid. This fits with Marx's view that capitalism does raise the total ability of humanity to produce. -- JD _ The simple way to read all your emails at ThatWeb http://www.thatweb.com
Re: Project for Pen-l
I've been following this discussion with interest. It's a good topic for Pen-l -- constructive useful. A few thoughts: 1. Forget about Ricardo. This stuff is interesting from a history of thought point of view, but modern trade theory differs from Ricardian theory in important ways. Some of the criticisms lefties have hurled at Ricardo bounce off the modern folks. If you want a point of reference, pick an influential contemporary textbook -- Salvatore for example. 2. I agree that the critique of global capitalism goes far beyond trade in goods and services. So-called trade agreements are now largely about commoditization, disembedding capital and final output from social/political constraints. Some of these constraints are venal or irrational, but others are necessary, and, in any event, commoditization usurps the space available for democracy. Nevertheless, trade theory itself is vulnerable. It embodies a laissez-faire ideology that has to be criticized if we want to take a progressive stand. Contrary to the ravings of its accolytes, it is *not* a mathematic truth beyond debate; it relies on falsifiable assumptions. We desperately need a well-written, methodologically sound rebuttal to mainstream trade theory -- both a high-end critique for our footnotes and a demathematized critique for our students. 3. In the meantime, here are the concluding paragraphs of a paper I wrote on Joan Robinson's critique of trade theory: Excerpt begins here: In the end, economic persuasion comes down to simple storiesfables, metaphors, or even bumper stickersthat encapsulate more complicated visions of how the world does or ought to work. The doctrine of free, unregulated trade has succeeded magnificently on this terrain. Why, we are asked, should anyone want to interfere with trade? No trade would ever take place unless it were in the interest of both parties, so how can the sum of all such trades be any less than the sum of all those advantages? If someone in a foreign country can make a good cheaper than you can make it at home, why would you be so foolish as to not buy it? After all, among local stores you would shop at the one that charges a lower price. And the theory of comparative advantage appears as nothing more than the obvious truth that two people, combining their efforts and specializing in what they do best, can produce more than they could singly. JR would have no trouble recognizing the ideological core of this set of fables; it is based on the assumption that there are only individuals in this world of international tradenations have no role. On the contrary, however, the division of the worlds people into nations has always had and still has powerful effects on their well-being, and this implies a different sort of fable. The payments position of the nations currency, its rates of economic growth and employment, and the effectiveness of its democracy are public goods: most individuals benefit or suffer from them even though they generally have no individual incentive to promote them. On the contrary, every time an individual chooses to import a good, no matter how praiseworthy that act might otherwise be, he or she is competing with the balance of payments space available to the nation for publicly beneficial actions that can also have negative payments effects. There is only so much space available, and a sensible nation that cared both for its citizens as private individuals and for their well-being as participants in a shared life would manage the two demands to enable both to be met tolerably. To give play only to private interests is to sacrifice public interests by default. This is, in other words, simply the Keynesian fable that JR did so well to promulgate transported to the international level. On a more analytical note, we have seen that, in the absence of intervention, it is typically not the case at the margin that an extra dollop of imports is automatically financed by an extra dollop of exports, yet this is what would be required in order for trade to adhere to the principle of comparative advantage. From a normative standpoint, however, comparative advantage remains a very good thing, a circumstance we should attempt to create among all the possible patterns of international trade and finance. This suggests that countries would be wise to manage aggregate trade and capital flows, restoring comparative advantage at the margin, and restricting or channeling external finance so that its use in genuinely capacity-enhancing activities is assuredor, in JRs own 1946 words, In short, the notion of a unique natural position of equilibrium is a mirage, and for better or worse, international trade must be directed by conscious policy. (p. 112) From, Why International Trade Theory Is Not a Theory of International Trade: A Confirmation of Robinsonian Skepticism, 2000
Re: RE: Re: Project for Pen-l
Devine, James wrote: Peter Dorman writes: ... Forget about Ricardo. This stuff is interesting from a history of thought point of view, but modern trade theory differs from Ricardian theory in important ways. Some of the criticisms lefties have hurled at Ricardo bounce off the modern folks... however, Ricardo may be relevant to pedagogy. For example, it is really easy to explain the standard 2x2 Ricardian matrix and then say: what happens if Portugal decides to _change_ its comparative advantage? (Why should the secretary put up with specializing in filing, typing, etc.? why not learn how to be a boss?) in addition to this issue of dynamic comparative advantage, how about: suppose that some of the workers from Portugal _move to_ England, so that the labor productivity numbers apply to them. Then it's easy to show that the rise in the production in England exceeds the loss of production in Portugal (unless there extreme diminishing returns to labor, so that England's labor productivity falls and Portugal's rise, significantly). But this was my point. Mobility of capital (and therefore endogenous changes in cost structures) and labor are built into the modern theory. There are models with one, the other and both. And Krugman et al. have introduced economies of scale and agglomeration, first mover advantage, etc. Unless your critique stands up to those models, you are not really debating neoclassical trade theory. Peter
Re: Re: Project for Pen-l
It would be interesting to have a discussion about the merits of the new trade theory. My opinion as of now is that there is not much there for progressives. At best, this theory shows how one part of the world can profit at the expense of another. Wonderful. And, as the theorists say as they backpedal, optimal protection has little room for error, and it is unlikely that real-world governments would design their policies so objectively and precisely. This may be an exaggeration, but, in the end, I think the new trade theory will go down in history as an opportunity for some folks at publish or perish institutions to get a few more articles in print. Peter [EMAIL PROTECTED] wrote: Peter wrote Contrary to the ravings of its accolytes, [international trade theory] is *not* a mathematic truth beyond debate... I haven't followed mainstream trade theory for about 15 years and, so I'm very out-of-date. All mainstream theories are moving targets and change constantly. But I think it is possible that the top mainstream trade theorists don't believe in the proof of the benefits of free trade. It seems to me that since the mid-1960s are large mainstream literature has developed which shows that, in principle, many types of trade interventions might benefit a country. Support for free trade from mainstream trade theorists comes mostly from their political theory -- that interest groups will hijack any trade intervention to help themselves at the expense of the nation. The problem is, however, that when any big name economist is trotted out in front of the public they CLAIM they support free trade for economic reasons when, in fact, I believe they are lying. They know the economic support for trade trade just ain't there. But to keep their membership in the AEA they know they have to claim economic support for free trade. Some have said, I think--or maybe I imagined this--, that if we tell people in public that some trade interventions might benefit the nation then we won't be able to stop the flood gates from opening and mostly bad trade interventions will happen due to interest group power. As a result the responsible thing to do is to lie to the public about the wonders of free trade. Eric
Re: Re: RE: Re: Project for Pen-l
As far as I know, Gar, trade theory is still in a comparative static world, so speed of adjustment issues don't arise. Does anyone know if recursive analysis or other dynamic techniques have been applied to trade? Peter Gar Lipow wrote: It strikes me that there is an information theory critique possible of too free a market in capital flows that may be supplementary to the other criticims. (This applies to both international and national capital markets.) If markets are looked at as feedback mechanisms, then you have a problem anytime the capability for feedback exceeds the ability to respond. For example capital can be pulled out of firms, or entire nations or entire regions in a matter of minutes. But the actual means of production -- even in service industries -- cannot shift nearly so fast. So it is like driving a car with an oversensitive steering mechanism, so that you cannot drive inside the lines, because the slightest pressure on the wheel takes you across four lane. Is this at a all a useful supplementary critique? Is this one of arguments used for the Tobin tax? Is there some standard economic term for excessive feedback? Devine, James wrote: Peter Dorman writes: ... Forget about Ricardo. This stuff is interesting from a history of thought point of view, but modern trade theory differs from Ricardian theory in important ways. Some of the criticisms lefties have hurled at Ricardo bounce off the modern folks... however, Ricardo may be relevant to pedagogy. For example, it is really easy to explain the standard 2x2 Ricardian matrix and then say: what happens if Portugal decides to _change_ its comparative advantage? (Why should the secretary put up with specializing in filing, typing, etc.? why not learn how to be a boss?) in addition to this issue of dynamic comparative advantage, how about: suppose that some of the workers from Portugal _move to_ England, so that the labor productivity numbers apply to them. Then it's easy to show that the rise in the production in England exceeds the loss of production in Portugal (unless there extreme diminishing returns to labor, so that England's labor productivity falls and Portugal's rise, significantly). In the end, economic persuasion comes down to simple stories-fables, metaphors, or even bumper stickers-that encapsulate more complicated visions of how the world does or ought to work. The doctrine of free, unregulated trade has succeeded magnificently on this terrain. Why, we are asked, should anyone want to interfere with trade? No trade would ever take place unless it were in the interest of both parties, so how can the sum of all such trades be any less than the sum of all those advantages? If someone in a foreign country can make a good cheaper than you can make it at home, why would you be so foolish as to not buy it? After all, among local stores you would shop at the one that charges a lower price. And the theory of comparative advantage appears as nothing more than the obvious truth that two people, combining their efforts and specializing in what they do best, can produce more than they could singly. one comment -- which is quite in line with Joan Robinson's ideas as Peter explained them -- is that the discussion above refers not to gains from trade _per se_ but to gains from specialization and cooperation. A simple analysis of solutions to the economic problem suggests that trade need not be the only solution: we could also rely on command (state control) or tradition. Further, I add decentralized command (mafias, corporations, etc.) and decentralized or grass-roots democracy to the list, while combinations are possible, such as grass-roots democratic control of the state. Jim Devine
Re: RE: project for Pen-l
Eric, Absolute advantage matters enormously, because that's the basis for the race to the bottom argument. In a comparative advantage world, such a race is impossible. [EMAIL PROTECTED] wrote: I'm uncertain of the importance of arguing for absolute advantage. Such arguments might fall into a false dilemma--you're either for comparative advantage or for absolute advantage. And, I guess the underlying argument is, that since the neoclassicals have claimed comparative advantage we must take the other side, absolute advantage.
