The Custom-House

I'd wondered what the survival

I'd wondered what the survival rate was

Brendan I. Koerner addresses the question, "Do Jet Stowaways Ever Survive?" in today's Slate.

"For the second time in a week, police at New York's Kennedy Airport have discovered a body in the wheel well of an arriving jet. What are the hazards of traveling in an airplane's wheel well, and do any of these desperate stowaways ever survive?..."

P.S. 1-2-04 Stuart Buck asks about the security implications: "Flights"

NAFTA and Mexico

Tyler Cowen at Marginal Revolution notes that the 10th Anniversary of the North American Free Trade Area (NAFTA) is coming up, and marks the anniversary with a posting on the benefits of the agreement for Mexico, here: "10th anniversary for NAFTA".

"...A recent World Bank report confirms this positive view [The view of NAFTA's impact on Mexico expressed by Cowen earlier in the post - Ben]: "without NAFTA Mexican exports would have been around 25 percent lower than the actual numbers, foreign direct investment would have been around 40 percent less and the country's per capita income in 2002 would have been up to 5 percent lower." Here is a summary of the report..."

Cowen's post links to the World Bank report.

World trade negotiations since Cancun

World trade negotiations since Cancun

Peter Gallagher summarized developments in Doha Round world trade negotiations since the failure of the Cancun talks in this December 9 blog posting: "Limp in October, too late in December ". The Doha Round is important since it is aimed at world wide relaxation of trade restrictions - as opposed to the partial and fragmented approach represented by regional agreements like the Central American Free Trade Area). Gallagher's column doesn't address efforts to create these regional agreements.

Gallagher sees the U.S. and Europe missing an opportunity for exercising leadership to get talks back on track in October.

"...There was a period, in early October, when it was clear that the consequences of their actions had started to dawn on the leadership of the African/Carribbean/Least-Developed group of countries who had pulled the plug at Canc�n. They had given away their best opportunity to keep up the pressure on the EU over agricultural export subsidies and on the USA over domestic subsidies to e.g. Cotton farmers.

The leadership of the G-21 group of developing country agricultural exporters (Brazil, Egypt, Argentina, South Africa ... although perhaps not India) were obviously shocked by the early termination of the Canc�n meeting and were undoubtedly ready to re-engage on agriculture. They thought they had been close to a win at Canc�n when the talks went belly-up over investment etc.

Despite behind-the-scenes pressure from Cairns Group members including Australia, however, neither the EU nor the USA was willing to 'take charge' of the talks after the collapse by offering a new way forward on key problem areas such as agricultural subsidies or industrial tariffs. Both USTR Zoellick and EU Commissioner Lamy retired to lick their wounds over the failure of their pre-Canc�n strategizing and to shield themselves from the inevitable recriminations..."

Gallagher doesn't see much scope for progress in the coming year. The U.S. will be preoccupied with national elections ("Although Bush has shown that there is no period in the US electoral cycle that need be free of protectionist log-rolling, the year or so leading to a Presidential election is traditionally the time when trade-demagogery is at it's worst."), and the E.U. with the introduction of 10 new member states.

Weakness in the current recovery

Weakness in the current recovery

Paul Krugman points out that, while the economy has grown considerably recently, incomes from wages and salaries have lagged behind. When GDP grew at 8.2% in the third quarter, wage and salary income only grew by 0.8%. Job growth has also, so far, lagged behind "the roughly 150,000 jobs needed to keep up with a growing working-age population." Krugman's column in today's New York Times is here: "Our So-Called Boom".

Blinder, Yellen and Stiglitz Yale

Blinder, Yellen and Stiglitz

Yale Economist William Nordhaus reviews The Fabulous Decade: Macroeconomic Lessons from the 1990s by Alan S. Blinder and Janet L. Yellen, and The Roaring Nineties: A New History of the World's Most Prosperous Decade by Joseph E. Stiglitz in the New York Review of Books, here: "The Story of a Bubble". Both books are histories of Clinton era economic policy and performance.

I learned about this from Brad DeLong's web site. DeLong quotes from the article and provides some commentary, here: "The 1990s Boom". DeLong, in turn, learned about the article from Paul Kedrosky, here: "Economist vs. Economist: Dissecting the Roaring 90's".

Balance of Payments Ed Lotterman

Balance of Payments

Ed Lotterman introduces the concept of the "balance of payments," relates it to 19th Century U.S. growth, WWI finance, and the determinants of the Great Depression, and finally draws an implication for current U.S. policy - all in one newspaper column, here: "Real World Economics: Leaders need background in trade realities".

Trade protection can cost jobs

Daniel Drezner posts on a Chicago Tribune story about job losses in the U.S. hard candy industry caused by U.S. sugar import restrictions: "Protectionism never tasted so sour".  The key point in the story: high U.S. sugar prices, associated with tariffs and quotas that keep U.S. sugar prices above world levels, are forcing U.S. hard candy producers to "outsource" production overseas.

"...In the last three years, nearly half of all U.S. candy cane production has shifted to Mexico, industry experts say...

But the story of the Mexican candy cane isn't your typical tale of American manufacturers chasing lower wages. It's more about the cost of sugar than the cost of labor...

In Chicago, for example, Brach's Confections plans to shut its plant in 2004, forcing about 1,000 workers out of their jobs. The Chicago area, the center of the U.S. confection business, has lost an estimated 3,000 candy-related jobs since 1998..."

I've just finished reading Douglas Irwin's Free Trade Under Fire (Princeton University Press, 2002.)  I'd strongly recommend it.  Irwin makes the case for free trade, focusing especially on the issue of jobs.  The second half of the book is on the history, political economy and law of U.S. trade policy.

Relevant here are some of Irwin's comments on sugar restrictions (and what we're getting for this sacrifice of candy jobs):

"...As already noted, the United States assists the domestic sugar industry through price supports and import restrictions in the form of a tariff-rate quota.  Under a tariff-rate quota, sugar-exporting countries are given a certain (small) quantity that they can sell in the United States at the regular tariff, and any exports beyond that specified quantity are subject to a tariff rate of nearly 150 percent.  As already noted, the sugar import restrictions and price supports cost domestic users of sweeteners $1.9 billion in 1998.  Domestic sugar beet and sugarcane producers reaped $1 billion as a result of these policies, with most of the benefit accruing to sugar beet growers.  The net loss to the economy is $900 million annually, $500 million due to economic inefficiency bred by the policy and $400 million in the transfer of quota rents to foreign exporters." (page 59)

  So, we are sending $400 million a year to foreign producers in order to engineer a transfer one billion dollars from consumers to domestic sugar producers (and to destroy an additional $500 in domestic wealth from the inefficiencies associated with the restrictions- this $500 million is in addition to the $400 we're giving to foreigners).

"...Sugar imports are restricted to maintain domestic price supports for sugar beet and cane producers.  The benefits of these restrictions are highly concentrated because Congress has not limited the amount of support that large farms can receive.  For example, one farm received over $30 million in benefits from the sugar program in 1991, and just 0.2 percent of all sugarcane farms - thirty-three in total - received 34 percent of the entire program benefits.  The family of Alfonso Fanjul single-handedly supplies the United States with about 15 percent of its sugarcane through its land holdings in south Florida and the Dominican Republic, collecting somewhere between $52 to $90 million in benefits from the price supports on U.S. production and the quota rents on Dominican sugar exports.  Not surprisingly, the Fanjul family could afford to make nearly three hundred thousand dollars in campaign contributions in 1988..." (page 61)

Irwin is drawing on sources written in the early 1990s, so his numbers are 10 years old.

Drezner points to relaxed sugar restrictions in the new Central American Free Trade Agreement (CAFTA).  Robert Tagorda links to Reuters stories which elaborate and discuss the domestic sugar producers' response and sources of influence: "Big Sugar".

Why are a small number of sugar producers able to get Americans to incur $900 million in expenses in order to transfer an additional one billion to them?  Tagorda links to Josh Chafetz, who explains one theory: "THE COSTS OF PROTECTIONISM"

Sunset provisions Chris Mooney, writing

Sunset provisions

Chris Mooney, writing in the magazine Legal Affairs, traces the history of statutory sunset provisions, here: "A Short History of Sunsets".

Mooney says the modern debate over sunset provisions began in the late sixties with a proposal by political scientist Theodore Lowi to incorporate sunsets into laws creating new federal agencies. The idea was subsequently taken up by the government reform proponents in the 1970s. The hope was that sunset provisions would force people who favored programs and agencies to periodically bear the burden of proof of re-justification.

The sunset movement had more success in getting sunset provisions at the state than the federal level. However, sunset provisions did not generally have the results that had been expected by their proponents:

"By setting a termination date on a particular law, a sunset provision is supposed to shift the burden of proof onto those seeking its extension. But once a law has been in effect for several years, it may come to have considerable staying power, as constituencies and interests dedicated to its continued existence develop. �In theory, sunset was sold as a process to terminate a board or agency unless the agency could demonstrate the need for regulation,� noted a 1981 report by the Council of State Governments. �In practice, . . . often the burden of proof has been on sunset audit agency staff to demonstrate that regulation was not necessary.�

The threat of termination forced government bodies to analyze the effectiveness of their regulations, but agencies defended their turf fiercely against the sunset process. The more established the agency, the more powerful its inertia. Proving Lowi's original insight, special interests with an investment in the status quo worked to save the lives of benefactor agencies. Few state government bodies were actually sunsetted out of existence, and legislators viewed sunset reviews as one of their most demanding and least rewarding tasks.

The results of the sunset process were, consequently, dismal...."

In the last half of his article, Mooney looks at the recent use of sunset provisions in the Patriot Act and in the two big Bush Administration tax cut bills.

Those interested in the history of sunset provisions might also be interested in this history of legislative riders: "Riders from Hell ".

I learned about the sunset article from Tyler Cowen at Marginal Revolution: "Against sunset laws".

Medicare vote bribe accusation Timothy

Medicare vote bribe accusation

Timothy Noah at Slate has been following the accusations that offers were made to bribe at least one congressman to vote for the recent Medicare legislation. His latest column (with a convenient set of links to earlier columns) is here: "Now It's a Scandal. New evidence that a House GOP leader offered a bribe.".

R. Jeffrey Smith also has a report in today's Washington Post, here: "GOP's Pressing Question on Medicare Vote. Did Some Go Too Far To Change a No to a Yes? ".

What's wrong with transparency? Lawrence

What's wrong with transparency?

Lawrence Solum explains "transparency" in this week's Legal Theory Lexicon: "Legal Theory Lexicon: Transparency". He explores, in a balanced way, the idea of transparency in politics, markets, and law. Because he is balanced, he explores both sides of the issue - and there are two sides of the issue. I just want to pull out one quote, because its something I've often thought as well. Transparency in government may be a good thing in general, but:

"Transparency in government comes at a price. Transparent processes may be inefficient--what can be done in private in minutes may take hours in public. Transparent processes may also distort decision-making, forcing political actors to pander to public opinion at the expense of good policy.