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Allow Me

12 Jun

In order to alleviate any suggestion of concern trolling on Matt Zeitlin’s part, I’m going to take a shot at why this Naomi Klein piece on Obama’s economic advisers is such a mess. Klein’s continued obsession with Milton Friedman as a symbol of everything that is wrong with anything approaching a market solution causes her to not only flatten distinction between economists, but also miss a growing consensus among liberal economists that more has to be done to ensure social welfare and address inequality. First here’s what Klein has to say about Jason Furman:

Furman, a leading disciple of Rubin, was chosen to head the Brookings Institution’s Hamilton Project, the think tank Rubin helped found to argue for reforming, rather than abandoning, the free-trade agenda.

In contrast to the Furman/Rubin position, Klein approvingly cites two economists:

The news is not all bad. Furman claims he will be drawing on the expertise of two Keynesian economists: Jared Bernstein of the Economic Policy Institute and James Galbraith, son of Friedman’s nemesis John Kenneth Galbraith.

So let’s turn it over to James Galbraith:

In a Washington Post essay published late last year, on the eve of the Democrats’ ascension to the majority, Senators Byron Dorgan and Sherrod Brown articulated a trade policy that typifies the consensus view of the party’s labor-liberal wing. They criticize “free trade,” call for strong labor and environmental standards in future trade agreements, and argue for aggressive policies to open foreign markets to American goods. Their critique reflects a genuine anger, and the concerns their piece embodies deserve to be met. Their program is populist, nationalist, muscular, and in tune with the mood of the Democratic base.

But it is not reality-based. As policy, it would not achieve the senators’ basic objective — namely, more jobs at higher wages in the United States. As politics, the danger is not that it will fail but that it might succeed. And then, progressives in power will repeat the pattern that conservatives set in 1981, pushing a program based on high expectations and illusions that ends in confusion, reversals, defeats, and an eventual lapse into incoherence and disrepute.

Not exactly a ringing endorsement of Klein’s anti-trade rhetoric. But what does the Rubin/Summers (and Furman, by implication) wing of economic centrists (part of Klein’s nasty Friedmanite cabal) think about the current economic situation? Here’s Larry Summers:

The domestic component of a strategy to promote healthy globalisation must rely on strengthening efforts to reduce inequality and insecurity. The international component must focus on the interests of working people in all countries, in addition to the current emphasis on the priorities of global ­corporations. […]

While labour standards arguments have at times been invoked as a cover for protectionism, and this must be avoided, it is entirely appropriate that US policymakers seek to ensure that greater global integration does not become an excuse for eroding labour rights.

Let’s be clear: the “Wall Street” and “Main Street” sides of economic policy (represented by Robert Rubin and Robert Reich during the Clinton years, respectively) are closer now than ever before.  Naomi Klein’s picture of the global economy is a caricature, and one that fellow critics of the Washington Consensus reject.  Anti-market screeds might be a winner for populist-minded voters, anxious about their financial security and the turn in the American economy, but it won’t make for good economic policy.  There are people out there who are gripped with by a Friedmanesque “free-market-in-all-things” ideology, but economists like Furman and Goolsebee aren’t among them.  The truly problematic ideology is Klein’s own.

Is Your Refrigerator Running? Then Welcome to Globalization

18 Nov

In light of the recent Oxford Word of the Year (locavore: those who eat only locally grown food), check out the link between refrigerator ownership and the rise of globalized supermarkets from Professor Sitaraman:

My argument was that increase in bulk shopping or weekly shopping is associated with globalization as well as increase in appliance sales in developing countries. For instance with the growth in appliance sales, particularly refrigerator ownership in developing nations, small farmer markets selling locally grown produce has been declining.

 

So You Want to Continue a Stealth Argument and Be a Neoconservative Apologist?

30 Oct

The great thing about Robert Kagan is that not only can he hold fast to his own dwindling island of foreign policy respectability (Q: How long can the Kristol/Kagan doctrine last? A: Islamofacism¹!), but can also continue a sloppily argued secret war² with Fareed Zakaria at the same time. (Points to Matt Zeitlin for catching this first and nailing Kagan, but minus a few for accepting Kagan’s reductive summary of Zakaria’s position)

A quick recap: Kagan’s review of The Future of Freedom for The New Republic was an intellectual hit piece which tried to reduce the book’s thesis to “Hooray for liberal autocrats/I ♥ aristocracy” (NB: I’d link to the articles, but TNR’s online archives are inaccessible while the magazine is revamping it’s website. You’ll have to read it through LexisNexis).

Kagan’s central error is the same one made by Thomas Carothers (in a piece Kagan cites in his WaPo article to bolster his argument), reading Zakaria’s argument (and related critiques of representative government) as a case for “democratic sequentialism” (i.e. rule of law and free markets are the necessary conditions for a sustainable democracy). Zakaria’s book (which does lean heavily, perhaps too much at times, on the role of markets and wealth in creation of lasting democratic reform) is more cautionary tale than a form of Rostow’s stages of development for democratic theorists; there is no ideal democratic citizen who will resist corruption and inherently lead toward more liberal policies.  Liberalism is made up of freedoms encouraged and held fast by constitutional protections, civic institutions, free-markets, and cultural norms.  What combination of factors are needed to foster and maintain a democratic regime, political scientists can’t say.  But policy makers would do well to realize that instant democracy can often run counter to the development goals they’d like to see achieved.

¹ When you think about it, this makes as much sense as other contexts in which you see this term used.

² Stealthy and infringing Marvel Comics copyright. Booyah!

What is the Optimal Rate of Liberalization?

30 Aug

Two articles in the latest issue of Foreign Policy–one by Robert Reich on capitalism and democracy (subscription only), and the other by Moisés Naím on the paradox of free-trade–got me thinking about what the optimal rate of liberalization might be and what sort of research had be done on the subject. As Reich points out:

But though free markets have brought unprecedented prosperity to many, they have been accompanied by widening inequalities of income and wealth, heightened job insecurity, and environmental hazards such as global warming.

This is one of the essential challenges of globalization: making sure that prosperity is broadly shared enough so that economic development isn’t derailed by the political process. If people start to get freaked out by the new private companies moving in down the street, or feel that their wages or security are threatened by a new trade deal, they’ll (rationally) seek redress through their political representatives. After that, it’s tariffs and protectionism, which might benefit some sectors of an economy but make the macroeconomy worse off. So how do you open markets without scaring the crap out of the electorate?

An admittedly limited search found only one article from 1997 that explicitly addressed the optimal rate of liberalization (in this case, trade liberalization) and it did so in the context of firm restructuring (PDF). It concludes that gradual liberalization may be better for a country with long-term development goals, while a faster, “big-bang” approach might be useful for short-term economic goals (because gradualism in an already competitive sector only encourages inefficient firms to hang around longer, reducing profits and souring people on the new reforms).

I’m sure that this sort of thing is hard to quantify or calculate; any optimal rate would depend upon factors like existing level of economic development, political openness, the sorts of political and civil institutions in country, and the available capital (natural and human). Those are a lot of factors to model. The answer might just be to liberalize as fast as the electorate can bear, with some of the “New Deal for Globalization” measures (from a July/August Foreign Affairs article) thrown in to alleviate anxieties and spread some of the costs around. These policy suggestions from Dan Drezner also seem like a way to avoid a mass of bandanna-clad protesters from marching on the capitol building and decrying the latest round of trade negotiations (and though the tear gas industry may be elated, it doesn’t do so much for the political process).

But this feels like policy afterthought rather than an actual plan for smoother liberalization. Suggestions?

The Turkey Question

28 Aug

Viewed through the lens of national self-interest, I’ve always thought of Turkey joining the EU as a general good, irrespective of what what it meant for Europeans. To some extent, I think fears about a changing European character or an immigration onslaught aren’t part of the US calculus for support, to say nothing of these fears being overblown. Having a moderate Muslim country as part of a Western transnational legal and trade framework is a boon to the world superpower. Of course, it’s the Europeans (or at least their elected representatives) and not the United States who will decide, so what’s best for America is somewhat besides the point.

With that in mind, I’m not sure how to think about a Turkey with a Muslim president (via Yellow is the Color). A president with strong religious credentials seems like a great partner for a Turkish EU induction. I often find European (and in this case, Turkish) secularization too aggressive, but much of that comes from living in a country where candidates openly profess their belief in God and no one tries to lead a coup. I accept that different concepts of secularization will be optimal for different countries.

Additionally, without narratives of long-term immigration and citizenship to fall back on, many Europeans are hostile to Muslim immigrants, and see their open displays of faith as an affront to European culture (witness France and their ban of the hijab). But Turkey bans the headscarf in government offices and schools too, and the Turkish military is hyper-vigilant on the secularization front.  A Muslim president might upset powerful secularists within Turkey, causing internal turmoil that impedes integration, or spark a backlash against the country from right-wingers in Europe, making an invitation to join the EU even less likely.  Turkey in the EU might be great for the US, but it seems increasingly harder to convince either Europeans or the Turkish that it’s also in their interests.

The Perfect Car, Made in America

28 Aug

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I know that by “perfect American car,” Garance Franke-Ruta meant one that was designed and manufactured by GM, Ford, or Chrysler, but really, how can you beat being one of Car and Driver‘s 10 Best for more than a decade? Not only is the Honda Accord really made in America, but with 244 horsepower and i-VTEC (and some of the best handling in the industry) you can hose kids in the standard Mustang while toting a gaggle of toddlers in the back seat. It’s not all about burning people off the line; anyone can be a hero in the straightaway. I love globalization.