Ben Muse

How to get quality products from China

Paul Midler, at Knowledge@Wharton, introduces the expression "quality fade" to describe,

the deliberate and secret habit of widening profit margins through a reduction in the quality of materials. Importers usually never notice what's happening; downward changes are subtle but progressive. The initial production sample is fine, but with each successive production run, a bit more of the necessary inputs are missing.

('Quality Fade': China's Great Business Challenge, July 25) .   Chinese suppliers can pull this off because the fading is done in slow, incremental steps.  Buyers may be slow to see it, and once they do, they may be reluctant to make major investments in developing relationships with new suppliers in response to what appear - at any point in time - to be small changes in quality.  They may look for less radical fixes.  They may engage in wishful thinking.

Dan Harris, a lawyer working in China, agrees that quality fade is common: China Quality Control Darkness Before the Dawn  (July 27).   Harris always warns his clients about the "fourth shipment":

In our experience, quality fade tends to happen disproportionally on the fourth shipment, probably because it is at this point that the Western importer is feeling comfortable enough with its Chinese manufacturer to place a large order and the Chinese manufacturer is feeling comfortable enough to cut corners.

What's Alaska's Congressional Delegation Been Up To?

Things they probably shouldn't have been.  We have two Senators and one Congressman.  They're all in trouble:

Senator Lisa Murkowski:

Senator Murkowski bought a prime piece of real estate from Alaska businessman Bob Penny for a fraction of its cost - essentially a gift worth over $100,000.  Joshua Micah Marshall reports from Talking Points Memo (draws heavily on the reporting of Laura McGann):

TPMtv: July 26, 2007

Watch the Full-Size Video

Scratch that - this one did get away.

"This one did get away": On the 26th Murkowski announced that she would sell the property.  Former Alaska Commissioner of Fish and Game McKie Campbell came to the Senator's defense in the Juneau Empire on August 3: My Turn: Don't rush to judge Murkowski .  Campbell served in a Republican administration, and is a friend of buyer and seller:

The heart of the issue has been the allegation that the senator and her husband, Verne Martell, purchased a lot on Kenai River for less than its value. Many years ago, I worked as an appraiser. I don't claim expertise, but was curious enough to make a few phone calls.

Murkowski and her family wanted to purchase land on the Kenai River to build a home. Bob Penney, who is a lifelong friend of the senator's and is not involved in any matters before Congress, owned a parcel of land next to his home. Penney is fortunate that he doesn't have to sell the land, but was interested in guaranteeing that he could pick his neighbors.

The sale imposed conditions through an memorandum of understanding signed by all parties on December 14. If Martell and Murkowski sold the property within five years, Penney would have both first right of refusal as well as 50 percent of any appreciation over the original sale price. When a sale carries restrictions such as first right of refusal or ceding a portion of profits from a future sale back to the seller, the full and true value can be significantly less.

The senator, Martell and Penney knew that because of the senator's position they would have to establish a fair selling price. They agreed upon the property's assessed value. Alaska statute requires that "the assessor shall assess property at its full and true value as of Jan. 1 of the assessment year" and "the full and true value is the estimated price that the property would bring in an open market and under the then-prevailing market conditions in a sale between a willing seller and a willing buyer both conversant with the property and with prevailing general price levels." The local government assessment is the only government-established, valuation of property in Alaska.

Unfortunately, based on allegations on a Web site calledTPMMuckracker and several generalized quotes from Realtors about asking prices, theAnchorage Daily News adopted the position that assessments represent artificially low values. It did so without any consideration of deed restrictions or analysis of comparable properties, and without talking to Shane Horan, the Kenai Borough property assessor. (I had no trouble reaching him), or any appraisers working in the area.

Other newspapers in the state picked up the story without questioning this. For the 2006 tax year, 311 Kenai property owners appealed their assessments; none because their assessment was too low. Full and true value for both appraisals and assessments is properly established through comparisons of actual sales, adjusted for differences, not by comparisons to asking prices...

This is the core of his op-ed.  Campbell stops short of drawing on his research to make the case that in this instance the appraised price  was actually about equal to the market price.  That seems strange to me, because the rebuttal would have been much more forceful if he had.

Review of CFIUS Process Changes

Christopher Wall, of Pillsbury, Winthrop, Shaw and Pittman, explains the changes in the CFIUS process: United States: Congress Approves CFIUS Reform Legislation Clearing The Way For Less Political Foreign Investment Reviews (July 25). 

This is a very helpful review of the changes and their implications.  The bottom line for foreign investors:

Conference Papers: International Law and Economics

The International Law Reporter weblog has run a series of posts on a December 2006 conference on international law and economics:

Last December, the Max Planck Institute for Research on Collective Goods hosted a conference on Public International Law and Economics: The Power of Rational Choice Methodology in Guiding the Analysis and the Design of Public International Law Institutions. A number of the conference papers will be published in a forthcoming issue of the University of Illinois Law Review. (Other papers have been and will be published elsewhere.)...

Here are links to the four posts:

• (a) Symposium: Public International Law and Economics (July 13);
• (b) Kontorovich: The Inefficiency of Universal Jurisdiction (July 17);
• (c) Symposium on Public International Law and Economics: Additional Papers (July 19); and
• (d) Symposium on Public International Law and Economics: Still More Papers (July 24).

Each post has abstracts and links to one or more papers.  There's a lot of good stuff here: public good expert Todd Sandler with a "rationalist approach to treaty formation and adherence," a paper with an economic analysis of the spread of bilateral investment treaties (BITs), "Precommitment Theory Applied to International Law: Between Sovereignty and Triviality," "The Case Against Reforming the WTO's Enforcement Mechanism," and more.

Viscusi on Risk

The Richmond Fed's Region Focus magazine has a great interview with W. Kip Viscusi.  Viscusi's an expert on risk and its application in regulatory and policy analysis.  Author of the well-regarded and widely used text Economics of Regulation and Antitrust .  This is a one of a series of interviews in the Focus; the inteviewer Aaron Steelman always has excellent questions:

CFIUS Reform and the Savvy Foreign Firm

What do the recent changes in the U.S. process for security reviews of foreign investments mean for foreign firms? 

Here's what the trade lawyers say (CFIUS and Latin American Firms, Latin Business Chronicle, July 23; for a refresher on the existing process, go to the Treasury's web site: Committee on Foreign Investment in the United States):

Vodafone, Verizon, and the CFIUS

U.K.'s Vodafone, the largest mobile phone operator in the world, is trying to think through what it wants to do with its stake in U.S. Verizon Wireless, and with its relationship to its U.S. partner Verizon Communications.  Vodafone owns 45% of Verizon Wireless, and Verizon Communications owns 55%.  Does Vodafone want to sell its 45%, sit tight... or buy Verizon Communications. 

Since Vodafone is a foreign company, its purchase of Verizon Communications would raise national security issues that would be vetted through the interagency Committee on Foreign Investmetns in the United States (CFIUS).  For details on the CFIUS process, see the U.S. Treasury site, Committee on Foreign Investments in the United States (CFIUS). 

The first article below the fold discusses the Vodafone-Verizon relationship, the second looks at some of the potential CFIUS issues:

How Well Will the New CFIUS Process Work?

Harold Furchtgott-Roth, a former FCC commissioner, and now a consultant and New York Sun columnist, raises some issues (Blocking Foreign Investment, July 16):

What would happen if the U.S. withdrew from Iraq?

Karen DeYoung and Thomas E. Ricks describe the results of recent "wargaming" of U.S. withdrawal from Iraq: Exit Strategies (Washington Post, July 17):

"Our recent research shows that children are less likely to work in countries with more international trade."

Eric Edmonds and Nina Pavcnik find a negative association between a country's openness to trade, and the extent of child labor: Trade and child labour (VoxEU, July 19):

...The negative association between trade and child labour holds even when considering only poor countries’ trade with high-income countries. It also holds up for trade in unskilled-labour intensive products. Quite simply, child labour is less prevalent in countries that trade more because countries that trade more are richer, and children work less in richer countries....

Our findings from India mirror the findings from a recent study of ours in Vietnam. For a number of years, Vietnam used an export quota to suppress rice exports out of a concern for domestic food security. In the 1990s, Vietnam liberalised its rice trade and allowed rice farmers to take advantage of higher international prices. The rice sector boomed and living standards of rice producing households improved substantively. Despite greater employment opportunities, children in households that benefited from higher rice prices became much less likely to work. Altogether, it appears that roughly 1 million fewer children worked as a result of rising rice prices in Vietnam despite potentially more lucrative employment opportunities....

"Beef noodles are no less important than water and electricity and its price level should comply with people's livelihood."

Price controls on beef noodles in the town of Lanzhou in China have a predictable result: Free market Believers in China, Even When it Comes to Beef Noodles (Heritage Tidbits, July 17) - but elicit expressions of disapproval at the national level. 

h/t: China Law Blog: Noodles in China, New York City Rent Control, Legal Fees in Poland, And Zimbabwe.  I Have A "Beef' With All That (July 18).

Measuring Trade Restrictiveness: "Tips, Tricks, and Traps"

The World Bank has supported the preparation of a new, theoretically sound, set of indices of trade restrictiveness.  Descriptions of the methodology, and the data sets, are here: Overall Trade Restrictiveness Indices.  Here is the abstract of the 2006 methodological description:

New CRS Report on the Recent CFIUS Legislation

Congress has passed legislation to reform the process the U.S. uses to review FDI proposals for national security concerns.  Now it's in front of the President. 

The Congressional Research Service (CRS) has updated its description of the legislation.  Exon-Florio Foreign Investment Provision: Comparison of H.R. 556 and S. 1610. (July 13, 2007) walks through each of its major elements, comparing the text of the House and the Senate bills.  The Senate version is somewhat different from the version that originated in the House, and is the version that was ultimately adopted.   Reports at the time indicated that the changes were minor.

The Attack of the Giant Alien Carp

You try to do the right thing - clean up a polluted river - but that just creates an opportunity for an invasion by giant alien carp - only the Army, with an underwater electric fence, stands a chance of stopping them: An Underwater Fence to Stop Invasive Species (Kari Lydersen, Washington Post, July 16):

"Fertility and the Real Exchange Rate"

Andrew K. Rose and Saktiandi Supaat find a connection: Fertility and the Real Exchange Rate  (NBER WP# 13263, July 2007). 

Here is the slightly reorganized abstract:

Theoretically a country experiencing a decline in its fertility rate can be expected to have higher savings, lower investment, a current account surplus, and accordingly a real depreciation.

We test and confirm this hypothesis, controlling for a host of potential determinants such as PPP deviations and the Balassa-Samuelson effect....  We use a quinquennial data set covering 87 countries between 1975 and 2005 to investigate the relationship between fertility and the real effective exchange rate.

We find a statistically significant and robust link between fertility and the exchange rate. Our point-estimate is that a decline in the fertility rate of one child per woman is associated with a depreciation of approximately .15% in the real effective exchange rate.

Plugstreet: Back to Ypres

The Plugstreet Archaeological Project is carrying out archaeological excavations of the World War I battlefield near Ploegsteert in Belgium.  This is their blog.

China: Currency Manipulator or Whiplash Victim?

Has China really been manipulating the yuan to make its exports relatively more attractive?  Jonathan Anderson, the chief Asian economist for UBS, doesn't think so (China Should Speed Up the Yuan’s Rise):

India wants to protect its sea lanes too

Earlier this week the Wall Street Journal carried a long and interesting article by Gordon Fairclough on China's efforts to develop a navy to protect its sea transport routes, and to isolate Taiwan if war comes: China's Growing Navy (Ben Muse, July 16).

India is also taking steps to protect its sea lanes.  This article Manu Pubby deals with India's Indian Ocean interests: India activates first listening post on foreign soil: radars in Madagascar. (The Indian Express, July 17):

Was the Informal 2003 U.S. Boycott of French Wines Successful?

No.

Here's the abstract of French Wine and the U.S. Boycott of 2003: Does Politics Really Affect Commerce? (Orley Ashenfelter, Stephen Ciccarella, Howard J. Shatz, NBER working paper 13258, July 2007):

China's growing navy

China increasingly feels the need for a strong navy to protect its worldwide commerial interests, and to increase its options on Taiwan: As China Grows, So Does Its Long-Neglected Navy (Gordon Fairclough, Wall Street Journal, July 16).

It wants to protect its access to the sea lanes:

Global warming is reducing the costs of mining in Greenland

Global warming is melting Greenland's ice sheet and glaciers, and reducing the costs of mining there: Greenland's Melting Glaciers Spur Mining  (Lisa Yuriko Thomas, Wall Street Journal, July 17):

New Photos of Third Ypres

One of several recently released photographs from the Third Battle of Ypres (or Passchendaele) in 1917 : Hell on Earth: The never before seen colour photographs of the bloody battle of Passchendaele (Victoria Moore, The Daily Mail, July 12).  (h/t Mark Thoma)

Moore's story doesn't provide much information on the source of the pictures, or the circumstances of their publication.   They appear to come from a book that may be the source: Passchendaele 1917: The Story Of The Fallen, by Frank Bostyn and Jan Van Der Fraeden is published by Pen & Sword at £25. To order a copy for £22.50 (p& p free), call 0870 161 0870.

James Reeve writes (see comments):

Sorry, but those photos are fakes - cut/paste and hand-tinted. The one of the German gunners is a composite of 2 well-known pics. A method of making coloured photos was used in WW1. It was called Autochrome, but was used by the French and in the Middle East by 2 Australians.

Mr. Reeve has also provided a link to one of the photos used to create the composite: Veteran Returns to Flanders & "Colour Photos":

      

In retrospect, there are a number of things that should have caused me to be more careful with this photo: (a) the arrangement of the elements in the photo is just too well composed to have been taken by someone, in no man's land, wearing a gas mask, and under fire.  The shell burst in the background is just too perfectly placed.  Not impossible maybe, but unlikely.  (b) The machine gunners should be up to their waists, or above, in muddy water but don't look disturbed by that at all.  (c) They don't look like they have much ammunition.  Or any supporting infrastructure or company of any kind.  It's unclear why they aren't in any sort of prepared defensive position, although there might be a reason for this. (d) It was associated with other photos of Allied soldiers who were not immediately under fire.  The very different subject matter should have raised questions about why all these photos were recently discovered together. 

I appreciate Mr. Reeve's comment, and I apologize for posting this, and not being more skeptical.

This is a powerful photo and I'll look forward to learning more about it from the book.  It raises some questions.  It looks like an action shot.  What possessed the photographer to rise up two or three feet above ground to take the picture?  Where did he get the presence of mind - under fire -  to  compose the photo as well as he did?  Especially if he was wearing his gas mask?

Text in red was added on July 29, after receiving the comment from James Reeve.

The Yuan and the Dollar: The CRS Summarizes US Policy Options

The Congressional Research Service (CRS) has released an updated version of its report China’s Currency: Economic Issues and Options for U.S. Trade Policy (June 28, 2007) by Wayne Morrison and Marc Labonte.  The executive summary is below:

The First Blogger

Tunku Varadarajan identifies the first blogger, and dates the creation of the blogging world pretty precisely (to Dec 23, 1997): Happy Blogiversary (Wall Street Journal, July 14):

What's up down south?

The Economist reports on Mercosur's struggles this week: Mercosur. A Turning Point? (July 5).  Mercosur's members hope to create a customs union with free trade behind common external tariffs.  But things haven't gone well:

It has failed to implement a pledge to create a genuine customs union, with a common external tariff and free trade within the block. And it has allowed its rule book to be riddled with exceptions.

The upshot is that barriers have multiplied. For example, Argentina's government has tacitly backed the protestors who have blocked the main road bridge to Uruguay for months on end, and has recently backed banana growers who object to the import of cheaper Paraguayan fruit. Rather than use Mercosur's dispute-settlement machinery, it has filed complaints against Brazil at the World Trade Organisation. Paraguay has failed to clamp down on widespread smuggling of Chinese-made electronic goods. And Brazil's partners object to the tax breaks given by its state governments to attract investment.

The left-of-centre governments that are in charge (except in Paraguay) talk up political and energy co-operation, though recently they have achieved relatively little of either. They have also favoured widening the group, rather than its deepening into a single market. Chile and Bolivia became associate members in the 1990s, entering into free-trade agreements with Mercosur but not accepting its common external tariff. Last year Mr Chávez's Venezuela was swiftly accepted as a full member, at the urging of Argentina's president, Néstor Kirchner, and his Brazilian counterpart, Luiz Inácio Lula da Silva. Now the left-wing presidents of Bolivia and Ecuador want their countries to join too....

Mercosur has plenty of other problems. They start with the big difference in size and government policies among members. Under Mr Kirchner, Argentina's priority has been to protect inefficient but labour-intensive industries as it recovers from socio-economic collapse in 2001-02. Smaller Uruguay and Paraguay complain that the group has done little for them.

Bridges, the weekly publication of the International Centre for Trade and Sustainable Development (ICTSD) reports on the recent summit meeting of Mercosur ("Common Market of the South") member states. (Bridges subscriptions are available here).

The summit was dominated by efforts to balance the needs of its larger and smaller members, and member state concerns over Hugo Chavez's Venezeula (apparently there are some concerns about Chavez's commitments to a liberal trade regime and democracy):

CFIUS Reform Passes House, Goes to Bush

The House passed the CFIUS reform legislation today: House sends foriegn investment overhaul to Bush (Kevin Drawbaugh (Reuters via Washington Post, July 11)

No CFIUS Reform Today?

News stories yesterday suggested that the House was poised to pass the Senate version of the CFIUS reform bill today (House may vote on CFIUS reform tomorrow, Ben Muse, July 9). 

However, I haven't seen any news stories about passage this evening.  The only item I've found so far is this, from UPI: Hunter Fights NSFIRSTA Bill Changes (Jul 10):

strange maps

The proprietor of the blog "strange maps" looks for "maps that are ‘different’, tell a story, probably aren’t in any atlas and are nice to look at to boot..."   There are 144 of them here so far.  You may already be aware of this site, it's had over 2,000,000 visitors since September 2006.

Take a look at #131.  The name of every U.S. state is replaced by the name of the country whose GDP it equals: 131 - US States Renamed For Countries With Similar GDPs.  Then look at #135, which provides more background to #131, and provides some variants: 135 - Update On the GDP Map of the USA. 

The basic #131 tends to sweep up smaller - but not negligable countries.  Here is a variant, in which groups of U.S. states are compared to the GDPs of the countries with the next four largest economies:

   

How pirates organized themselves

Peter Leeson of West Virginia University looks at the ways pirates organized themselves: An-arrgh-chy: The Law and Economics ofPirate Organization.  (working paper, June 19, 2007). 

James Surowiecki based his July 9 New Yorker column on Leeson's paper: The Pirates’ Code, and on a new book by Colin Woodward, The Republic of Pirates: Being the True and Surprising Story of the Caribbean Pirates and the Man Who Brought Them Down .  (h/t Tyler Cowen). 

From Leeson's abstract:

The complex vaccination externality

Univ. of Rochester School of Medicine

Jason Shafrin posts on vaccination externalities.  These are more complex and interesting that you'd think (quoting the article he is posting on: "the patterns of externalities we find are quite different from, and more complex than, the diagrammatic presentations found in standard microeconomics or health economics textbooks"): Vaccination Externalities (Healthcare Economist, June 13)

House may vote on CFIUS reform tomorrow

Stephanie Kirchgaessner reports: Congress set to reform takeover panel (Financial Times, July 9):

Lawmakers will on Tuesday seek to end lingering questions about US openness to foreign investment with a bill they say will both strengthen the national security vetting process and protect deals from being politicised.

The expected passage by the House of Representatives of the bill, which tweaks the Committee on Foreign Investment in the US (Cfius), the interagency panel that investigates deals on national security grounds, comes more than a year after a congressional furore scuppered a bid by state-owned Dubai Ports World from taking over five US port terminals.

The reform increases the transparency of the process to Congress, and may reduce attempts to exploit the process for competitive purposes or political mileage:

While Mr Frank [Barney Frank, Chairman of the House Financial Services Committee - Ben] acknowledged that it was possible that transactions by non-US companies could still create controversy on Capitol Hill, he expected that the new law, which enhances communication between the executive branch agency and relevant members of Congress, created a better procedure for the interagency panel to handle potential problems....

Nancy McLernon, senior vice president of the Organisation for International Investment, which lobbies on behalf of US subsidiaries of foreign companies, said the bill would take the process out of the “shroud of secrecy”.

“When a controversial deal comes along, there ... won’t be those calls to change the system, because there is a better understanding and a formalised mechanism to inform members of Congress.”

The result may be a more attractive U.S. environment for foreign investors:

“This is reality. It says you can invest in America with some degree of security,” Mr Frank told the Financial Times.

The crux of the Doha problem

Jagdish Bhagwati and Arvind Panagariya explain (Doha: Why the Key to Its Success lies in Washington, VoxEU, July 8).

A lot of progress has been made in the negotiations:

Michigan tries to stop invasive species

Douglas Belkin reported on a trade related issue this week - invasive species: What's Black and White and Has the Great Lakes Seeing Red?. Invaders Like Zebra Mussels Prompt Michigan to Require Clean Ballast; Shippers Sue  (Wall Street Journal, July 5). 

He focused on zebra mussels in the Great Lakes:

Rep. Dingell has a good idea

One of the best things we can to do hearten our friends, dismay our enemies, conserve energy, and enhance our national security, is increase taxes on gasoline consumption.  If we want to reduce our dependence on oil we need to face up to its true costs.

Greg Mankiw would like to see a tax of $1/gallon on gasoline, phased in over ten years at a dime a year.  He explains why, here: The Pigou Club Manifesto (October 20).

Now House Energy and Commerce Committee Chairman John Dingell is about to propose a carbon tax, that would increase the tax on gas by $0.50. (Dingell to propose 50 cent gasoline tax increase , Chris Good, The Hill, July 7) I'll look forward to learning more about the details.  But this sounds smart to me.

I'd prefer Mankiw's higher tax, but Dingell's proposal may be a good.  There should be some offsetting income tax break addressed to lower income tax payers, to relieve some of the burden for them.

Andrew Samwick took a trip to Hawaii with his family recently;  he estimates his family's annual fuel consumption associated with the trip, and draws conclusons for energy taxation: Getting There Was More than Half the ... (Vox Baby, July 7).

Update: If Dingell introduces this, it isn't because he hopes it will pass.  Here is Edmund Andres in the New York Times: Counting on Failure, Energy Chairman Floats Carbon Tax (July6):

The proposal came from Representative John D. Dingell of Michigan, chairman of the House Energy and Commerce Committee, and it runs directly counter to the view of most Democrats that any tax on energy would be a politically disastrous approach to slowing global warming.

But Mr. Dingell, in an interview to be broadcast Sunday on C-Span, suggested that his goal was to show that Americans are not willing to face the real cost of reducing carbon dioxide emissions. His message appeared to be that Democratic leaders were setting unrealistic legislative goals.

“I sincerely doubt that the American people will be willing to pay what this is really going to cost them,” said Mr. Dingell, whose committee will be drafting a broad bill on climate change this fall.

“I will be introducing in the next little bit a carbon tax bill, just to sort of see how people think about this,” he continued. “When you see the criticism I get, I think you’ll see the answer to your question.”

h/t to Mankiw: A saboteur joins the club (July8).  If something is too good to be true, it probably isn't.

Revised July 8.

James Fallows visits a plant in China

James Fallows reports on Chinese manufacturing in the July/August Atlantic: China Makes, The World Takes (July/August, 2007). 

One morning he visited a plant filling online orders for a U.S. company:

Did the Africa Growth and Opportunity Act work?

The African Growth and Opportunity Act (AGOA) reduced U.S. trade barriers for goods from African countries that met certain conditions.  The objective was to give their economies a boost.

Did it work?  New research by Garth Frazer and Johannes Van Biesebroeck suggests that it did: Trade Growth under the African Growth and Opportunity Act (NBER working paper 13222, July 2007). 

From the abstract:

How they built the Pentagon

The Economist reviews  The Pentagon: A History by Washington Post reporter Steve Vogel.  Vogel describes the construction of the Pentagon between 1941 and 1943, and its subsequent history. 

Other reviewers note the book's discussions of the 1967 March on the Pentagon (when it survived the attempts of Abby Hoffman and others to levitate it), and 9-11.  The Economist review focuses on its construction - an impressive wartime achievment: Building the Pentagon. At the Double. (June 30):

Samwick on Making U.S. Fiscal Policy

Andrew Samwick, who used to be Chief Economist on the President's Council of Economic Advisors, explains something about how an administration's fiscal policy is made, and more about how it should be made: How To Advise on Fiscal Policy (Vox Baby, July 6).  I  learned about this from Brad DeLong. 

Five years old too

This blog was five years old yesterday.  The earliest post I can find was July 4, 2002, at my old Web address (Ben Muse). 

John Quiggin started his weblog on June 20, 2002 (Five Years Old), so he's been at it about two weeks longer than I have.  Two weeks apart, but he started at the winter solstice, and I started shortly after the summer solstice.

Increasing international interest in restricting FDI

Deborah Solomon reports that a number of countries are increasing legal and bureaucratic obstacles to foreign direct investment (FDI) [Wave of Protectionism Gains Force. U.S. Frets as Nations From China to Canada Curb Foreign Investment, WSJ, July 6] . 

She notes that while there hasn't been a disruption of FDI yet (and in fact it appears to have been growing in 2005 and 2006),

"...both sexes can babble on senselessly"

Women don't talk (much) more than men; women use about 16,200 words per 17 hour waking day, men about 15,700.  Evidently the difference was not statistically meaningful in the sample of college students studied.  There there is tremendous variation around the mean among the members of each sex.  And both sexes can "babble on senselessly." 

What they talk about differs; women tend to talk more about relationships, and men talk more about technology, work, money, and make more use of numbers.   But there is also tremendous variation within each sex with respect to content as well as volume.

Researchers at the University of Arizona made the estimates,

...by recruiting 396 U.S. and Mexican college students who wore a personal digital assistant with a recorder for anywhere between two and 10 days.

The devices recorded for 30-second periods every 12 or so minutes, giving representative samples of how much each person talked.

Teams of transcribers took down every word and then extrapolated each person's daily verbiage.

Which is the chatty sex? Turns out both are (Maggie Fox, Reuters, July 5)

New US IP Policy for Trade Agreements

Martin Vaughan has written a very useful post on the intellectual property implications of the May agreement between Congress and the Administration: US To Loosen Drug Patent Provisions In Some Trade Deals (Intellectual Property Watch, May 17:

Health impacts of climate change in the U.S.

Olivier Deschênes and Michael Greenstone look at the U.S. health impacts of global warming: Climate Change, Mortality, and Adaptation: Evidence from Annual Fluctuations in Weather in the US (NBER working paper #13178, June 2007).  We're going to use more energy inputs to produce health.   From the abstract:

Trading for terror

Terrorists need to move money across international borders to fund their work.  One of the main fronts in the war on terror is the Treasury's fight to close off the funding mechanisms.

Glenn Simpson and Benoit Faucon report in today's Wall Street Journal about a development in terrorist efforts to fund their operations: Trade Becomes Route for Money Tied to Terrorism (July 2)

After a long and intense crackdown on cross-border money laundering, authorities say terrorist supporters, narcotics syndicates and sanctions busters have adopted a new method of sneaking funds past the watchful eye of the law: the global commodity trade.

The practice, known as "trade-based money laundering," was pioneered by Latin American drug smugglers in the 1990s. Now, it is spreading to Europe and the Middle East.

Here's how the practice works: Instead of wiring money directly from one country to another, a would-be money launderer buys foodstuffs like sugar or vegetable oil or other goods. Those goods are far easier to deliver to restricted destinations like Iran and the Palestinian territories because they often look like legitimate aid. When they arrive, local merchants transfer the goods on, or simply sell them for cash. A portion of the proceeds end up with local terrorist groups or criminals....

The illicit trades are often blended in with legitimate ones, which makes them difficult to single out and the source of their funding hard to trace. Authorities say the scope and prevalence of the practice is tough to determine with any precision, but it is clearly on the rise.

This sounds like an expensive way to move money.

Vessel hulls and haute couture

Congress is considering extending copyright protection to fashion designs, building on provisions to that provide protection to vessel hull designs.

Jessica G. Jacobs provides analysis for the Congressional Research Service: Copyright Protection for Fashion Design: ALegal Analysis of the Design Piracy Prohibition Act, H.R. 2033 (Congressional Research Service via Open CRS, June 28, 2007). 

From the abstract:

Is Chinese pollution killing fewer persons per capita than EU pollution?

Richard McGregor reports from Beijing on a new World Bank study: 750,000 a year killed by Chinese pollution (Financial Times, July 3).  There are two parts to the story: (1) the deaths, and (2) the suppression of the numbers: