The Custom-House

What do you do with the francs, once you've sold them the wheat?

What do you do with the francs, once you've sold them the wheat?

The Economist reviews a biography of 19th and early 20th Century art dealer Joseph Duveen, "Flogging culture to Americans" .

Here's what we apparently did with some of our francs:

"THE half-century between the 1880s and the Wall Street crash of 1929 saw one of the most remarkable migrations of cultural artefacts. In unprecedented quantities, Old Master paintings, sculpture, furniture, silver, Chinese porcelain, altarpieces, books and manuscripts, medieval architecture, clocks and carpets were shipped from Europe to the United States.

This was not the booty of war, but rather a seismic shift in the world economy. In the late 19th century, European agricultural revenues collapsed as imported grain from America�and the discovery of oil there�caused steep falls in food prices. The land-rich families of the British and European aristocracy, who owned most of Europe's cultural treasures, faced mounting debts and even economic ruin. The new rich were Americans who marked their ascendancy with the trappings of fine art from the lands of their forefathers.

The Europeans sold; the Americans bought. The new collections formed the basis of the great American museum collections we know today. The scale of the enterprise, even early on, was something to be reckoned with. When John Pierpont Morgan died in 1913, his art collection was valued at $60m. These and similar collections would be worth billions today..."

A lot of these imports found their way to Boston's Isabella Stewart Gardner Museum.

Administration's Commerce Secretary Choice

Administration's Commerce Secretary Choice

Mike Allen and Jonathan Weisman at the Washington Post report on the Bush Administration choice of Kellogg executive Carlos Gutierrez to head the Commerce Department: "Gutierrez Is Pick for Commerce Secretary"

Weisman provides a biography, here: "Nominee Led Kellogg's Upswing".

The first article is most interesting for the light it sheds on the role of economic advisors in the current administration:

"Administration officials said Bush and senior adviser Karl Rove believe their economic lineup was a shortcoming of the first term and are determined to seat a stronger team to sell Congress on Bush's campaign promises to add private accounts to Social Security and rewrite major portions of the tax code...

Bush aides said that in addition to Gutierrez's inspiring immigrant's story, they see his background in sales as a crucial credential, since Bush has used his economic team primarily to promote the White House agenda rather than to make policy. Officials familiar with the search process said that, Gutierrez notwithstanding, the White House has found it harder to attract a top-flight team because some candidates are unwilling to give up lucrative posts to come to Washington to be White House cheerleaders.

One economist, who was rumored to be up for a position on the Council of Economic Advisers, said he could not take a job that has been steadily pushed to the sidelines over the past two years. "You can't be attracted to a job where you'd be out of the loop," he said.

A top White House official disputed that, saying: "The idea we can't recruit people to serve because they don't want to be cheerleaders is absolutely wrong..."

After reporting on two economists who have declined positions in the administration, the article goes on (drawing heavily on remarks by conservative economist Bruce Bartlett):

"But some Republican economists say the administration's top economic jobs have been marginalized, while their inhabitants have been publicly humiliated.

"Why would you want to take a job where you have no influence?" asked Bruce Bartlett of the conservative National Center for Policy Analysis. "What's the point?" ...

The dismissals of Treasury Secretary Paul H. O'Neill and chief economic adviser Lawrence B. Lindsey two years ago signaled that Bush would accept no dissent or friction in his administration, Bartlett said.

Treasury Secretary John W. Snow is seen as more of a promoter of White House policymaking than a policymaker, and Snow faces anonymous quotes predicting his departure. "It doesn't look like the White House treats its economic advisers very well, regardless of competence or loyalty," Bartlett said."

Byrd Amendment Sanctions

Last Friday, the World Trade Organization (WTO) gave the go-ahead to the EU countries, and six other countries, to impose punitive tariffs on exports from the U.S. USA Today has the story, "WTO approves sanctions over U.S. anti-dumping law"

How to estimate the appropriate anti-dumping tariff for shrimp

How to estimate the appropriate anti-dumping tariff for shrimp

Sebastian Mallaby explains how we do it in the U.S.:"Jumbo Shrimp Follies"

Thanks to Craig Newmark for the pointer.

Thank God we've got the WTO now!

Deirdre McCloskey reports,

"In one decade in the eighteenth century, according to the Swedish economist and historian Eli Heckscher in his book of 1932, Mercantilism, the French government sent tens of thousands of souls to the galleys and executed 16,000 (that?s about 4.4 people a day over the ten years: you see the beauty of statistical thinking) for the hideous crime of...are you ready to hear the appalling evil these enemies of the State committed, fully justifying hanging them all, every damned one of their treasonable skins? ...importing printed calico cloth..."

This is from her paper, "The Secret Sins of Economics." This sort of thing undoubtedly violates some sort of multilateral trade agreements, or certainly will with the expiration of the rules allowing clothing and textile quotas at the end of the year.

There are many sins, but "in the end they are one, deriving from pride, as all sins do." I can't tell you what the one sin is yet. I've worked my way through the "Virtues misidentified as sins," "Venial Sins, Easily Forgiven," and have reached, "Numerous Weighty Sins Requiring Special Grace to Forgive But Sins Not Peculiar To Economics." The last section is "The Two Real Sins, Almost Peculiar to Economics." She doesn't tell you what the ultimate sin is until the end, and I'm not sure I should tell you when I find out. I don't want to spoil the surprise for you.

I learned about this from a posting by Tyler Cowen: "The Secret Sins of Economics"

P.S. 11-11-04; 11 PM:

After thinking it over this evening, I'm wondering about this estimate of 16,000 executions. Is this really true? It sounds unlikely. John McDermott indicates, in footnote 12 to "Mercantilism and Modern Growth" ) , that Robert Ekelund and Robert Tollison disagree with the 16,000 estimate in their 1981 book Mercantilism as a Rent-Seeking Society. (College Station: Texas A&M University Press).

We should copy the Chinese

We should copy the Chinese shamelessly

And the Cubans, and the Indians, and the Brazilians, and anyone else who has a good idea (always giving due deference to intellectual property rights).

The Red Prawn posts on things they do well outside the US and Canada: "Great ideas from China". Mahalanobis provides a useful supplementary post: "Great Ideas From China".

Second Term Economic Policy-Maker Changes

On Thursday the Gregg Hitt and Jacob Schlesinger reported on potential administration personnel changes in the Wall Street Journal

"On the economic team, Treasury Secretary John Snow and budget director Josh Bolten are expected to stay for a time. The other two main players - Steve Friedman, head of the National Economic Council, and Greg Mankiw, chairman of the Council of Economic Advisors - are expected to leave soon."

Thursday's Journal also carried a reminder that Alan Greenspan's term will be up in January 2006, and that he can't be reappointed.

"A critical decision will be picking a successor to Federal Reserve Chairman Alan Greenspan. His 14-year term as Fed governor expires in January, 2006, and by law he can't serve another one. Many former administration officials put Harvard University's Martin Feldstein at the top of the list of favorites.

Mr. Feldstein was chairman of President Reagan's Council of Economic Advisors and has provided the intellectual underpinnings of some of Mr. Bush's economic policies, especially the idea of private Social Security accounts alongside the regular ones. Glenn Hubbard, the first chairman of the Council of Economic Advisors, may also be considered, although at 46, his youth could be a drawback."

Gary Fields, Robert Block, and Greg Ip reported on other potential changes in Friday's Journal:

"The central question in economic policy is whether Treasury Secretary Snow remains. He campaigned heavily for President Bush, especially in his home state of Ohio - though he gave the Kerry campaign useful fodder by branding job losses there "a myth." He is seen in Congress as ineffectual, and that could make him expendable if Mr. Bush needs somebody stronger to push through tax and Social Security revisions.

But Mr. Bush may choose to run those revisions more through the White House. In that case, one of the little-known economic officials who could make a big difference over the coming year is Charles P. Blahous III, a former congressional staffer who is the top administration offical on Social Security overhaul.

Securities and Exchange Commission Chairman William Donaldson is expected to leave at some point during Mr. Bush's second term. Appointed originally as a caretaker to calm tensions after the scandals of his predecessor, Harvey Pitt, Mr. Donaldson has proved a more vigorous corporate reformer than Wall Street had expected. Many companies had complained to the White House and a second Bush term could bring the "potential for trying to undo what the SEC has done in the last few years," said one commission official."

So many promises Partial Social

So many promises

Partial Social Security privatization, extension of the first term tax cuts, revenue neutral tax simplification, cutting the deficit in half by 2009, more spending for education, no cuts to defense and national security spending...he can't do it all. Jonathan Weisman reports in Friday's Washington Post:"Analysts Call Outlook for Bush Plan Bleak"

"President Bush signaled yesterday that he would add personal investment accounts to the Social Security system, simplify the tax code without raising taxes and cut the budget deficit in half, all before he leaves office in 2009.

Ambitious as those promises are, they may be mathematically impossible, budget and policy analysts say..."

Defining the baseline carefully can help:

"Chad Kolton, a spokesman for the White House budget office, said the president can and will cut the deficit in half by 2009. But, he said, the deficit in 2009 would be half what the White House first projected it to be for 2004: $521 billion. That projection, made in January, proved to be inflated by $108 billion, in part because faster economic growth produced $82 billion in additional tax revenue and in part because spending was $27 billion less than anticipated.

But Kolton said that pledge never included the cost of Social Security reform, nor will the 2006 budget that Bush will unveil in early February."

No interest in deficit reduction

No interest in deficit reduction

Brad DeLong doesn't see any interest in deficit reduction among Republicans in Congress or in the White House: "Second Term Economic Policy: A Modal Forecast"

"...Thus our current rulers will only take the deficit seriously when markets lose confidence in the American political system's ability to handle its finances, and the dollar falls and interest rates spike. By then it will be very late in the day indeed, and maneuvering room will be tight."

As Paul Blustein and Jonathan Weisman suggest in this Washington Post story, "Dollar Falls On Fears of U.S. Deficits", administration comments since the election don't suggest a lot of concern over the deficit:

"President Bush's news conference yesterday did little to lessen concerns over the deficits, Wall Street analysts and currency traders said. Bush simultaneously promised not to raise taxes under the guise of tax simplification, to pursue a costly restructuring of Social Security and to cut the budget deficit in half by 2009."

Revised 11-5-04.

Red and Blue Counties Brad

Red and Blue Counties

Brad Delong links to a map by Robert Vanderbei showing "red and blue" counties. This is much more interesting than the "red and blue" state maps, and paints a more complex picture: "Purple Haze: The Real Vote Map"

Reviewing the county level data shows that the country is less sharply divided along "NE-West Coast" and "South-Plains" lines than the state maps suggest.