The Custom-House

How did Lou Dobbs get that way?

Ken Auletta tries to explain in Mad as Hell.  Lou Dobbs's Populist Crusade (New Yorker, December 4, subscription not required for this online content).  Auletta's Dobbs:

• is a risk taker, willing to leave a well paying job to try something new, uncertain, and interesting
• is an entrepreneur, innovating and creating new things; for instance, a new approach to news programming
• is smart
• may well believe what he says about immigration and outsourcing
• is aggressive, can be nasty
• isn't plagued by self-doubt or an interest in the other side of the argument.

You know some of this already from his CNN broadcasts, but the article, which deals with Dobbs and his interaction with CNN, is worth-while.  Here is another, important, part of the background to the economic populism that played an important role in the recent mid-term elections.

Dobbs's transformation from a straight business journalist to an economic populist took place four or five years ago, after he returned to CNN from a sojourn as a dot-com entrepreneur and NBC business journalist:

At first, the impact of Dobbs’s return on the program [CNN's Moneyline - Ben] was slight. The ratings for “Moneyline” went up only slightly. Dobbs says that his new, more aggressive tone was prompted by a series of events: corporate scandals (Enron, M.C.I., Adelphi, Tyco); tax cuts that Dobbs felt benefitted the rich at the expense of the middle class, and also generated enormous budget deficits; and, above all, the terrorist attacks of September 11, 2001. After September 11th, Dobbs began wearing a flag pin on his lapel; other changes came gradually.

Dobbs and his producers agreed that the C.E.O. interviews were too soft. “We were doing—I don’t want to say puff pieces—but we were just scratching the surface,” Jim McGinnis, who has worked with Dobbs for two decades, says. They noticed that their e-mails spiked every time they did pieces on jobs going overseas or on illegal immigration. They began talking about adding more edge to the program. “I was determined to drive the broadcast very hard on issues that affect the quality of life of most Americans,” Dobbs says. As the managing editor, he already enjoyed editorial control. He decided that he also needed more freedom to express his views, and says that he went to Jim Walton, the president of CNN Worldwide, who agreed to relax the network’s no-opinion strictures. “Take it as far as you want,” he says that Walton told him, although viewers had to be informed at the beginning of the program that it would include opinion. Walton confirms this conversation. Opinion is fine, he told me, “if it’s clearly labelled. One of the things our critics said years ago was that CNN is the same”—boring. What Dobbs is doing demonstrates that “CNN is not the same.” ...

The changed emphasis of the program was probably brought about by a mixture of conviction and commerce. With so many choices, McGinnis observes, “there’s a blur out there. If you don’t stand for something and people don’t see what you are, you’re passed by. . . . It’s a business.” By May, 2002, the anniversary of Dobbs’s return, the “Moneyline” ratings had doubled. A year later, the title of the program was changed to “Lou Dobbs Tonight.” When he was asked to describe his ratings success, Dobbs, anticipating skepticism, said, “You’re not going to believe this, but I don’t pay a lot of attention to the numbers. I can tell you the trend is up.”

Daniel Drezner saw this first: Mickey Kaus' dream article (Nov 27)

Rice reform

Daniel Griswold rips into U.S. rice policy: Grain Drain. The Hidden Cost of U.S. Rice Subsidies (Cato Institute, Nov 16).

The indictment:

James Surowiecki goes after sugar and ethanol tariffs

In the New Yorker: Deal Sweeteners (Nov 11).

...Unfortunately, the ethanol produced in the U.S. comes from a less-than-ideal source: corn. Corn ethanol’s “net energy balance”—the amount of energy it yields in proportion to how much energy goes into its production—is significantly lower than that of other alternatives, and modern corn farming isn’t easy on the land. By contrast, ethanol distilled from sugarcane is much cheaper to produce and generates far more energy per unit of input—eight times more, by most estimates—than corn does. In the nineteen-seventies, Brazil embarked on a program to substitute sugar ethanol for oil. Today, every gallon of gas in Brazil is blended with at least twenty per cent of ethanol, and many cars run on ethanol alone, at half the price of gasoline.

What’s stopping the U.S. from doing the same? In a word, politics. The favors granted to the sugar industry keep the price of domestic sugar so high that it’s not cost-effective to use it for ethanol. And the tariffs and quotas for imported sugar mean that no one can afford to import foreign sugar and turn it into ethanol, the way that oil refiners import crude from the Middle East to make gasoline. Americans now import eighty per cent less sugar than they did thirty years ago. So the prospects for a domestic-sugar ethanol industry are dim at best.

We could, of course, simply import sugar ethanol. But here, too, politics has intervened: Congress has imposed a tariff of fifty-four cents per gallon on sugar-based ethanol in order to protect corn producers from competition. A recent study by Amani Elobeid and Simla Tokgoz, scientists at Iowa State University, projected that if the tariffs were removed prices would fall by fourteen per cent and Americans would use almost three hundred million gallons more of ethanol...

...Our current policy is absurd even by Washington standards: Congress is paying billions in subsidies to get us to use more ethanol, while keeping in place tariffs and quotas that guarantee that we’ll use less...

I learned about this column from "Bad Economic Policy, Bad Energy Policy, and Bad Foreign Policy" (Economist's View, Nov 20).

What would it cost to attack a city with a home-made nuclear bomb?

What would it cost a terrorist group to stage a nuclear attack on a city? 

Peter Zimmerman (Department of War Studies at King's Collect London) and Jeffrey Lewis (John F. Kennedy School of Government at Harvard) add it up in the Nov/Dec issue of Foreign Policy (The Bomb in the Backyard - subscription required).

Zimmerman and Lewis assume an attack mounted against a U.S. city from within the U.S. (to avoid the security issues raised by bringing the bomb across the U.S. border).   That is a somewhat different scenario from this: Suppose terrorists set off a nuclear bomb in a container in the Port of Long Beach? (Ben Muse, August 20, 2006). 

The bomb would be "a crude but well-known design concept, widely available on the Internet, that is similar to the device that the United States used when it bombed Hiroshima."  The finished bomb would be less than nine feet long.

It would take about a year, and a relatively remote site (say an old ranch in Texas, or perhaps Wyoming).  It could be done with 19 persons (the size of the team that carried out the 9-11 terror attacks).  Total cost is somewhere between $4.4 million and $6.4 million.  The costs break out this way:

• Senior physicist and post-doc level assistants to design the device over three to six months ($200,000)
• Metallurgy and casting ($270,000)
• Precision machining and construction ($230,000)
• Gun design, assembly, and testing ($230,000)
• Electronics, Arming, Fusing, and Firing ($150,000)
• Purchase and infrastructure improvements to the ranch ($200,000)
• Fissile material ($3,000,000 to $5,000,000)
• Transporting the bomb to the attack site ($153,000)

Public Citizen's Global Trade Watch analyzes the mid-term results

And likes what it sees: Election 2006: No to Staying the Course on Trade (Nov 8).

From a longer report, with detailed seat-by-seat analysis:

100% Fair Trade Candidates Up For Re-Election 100% Re-Elected: The Politically Smart Long Term Investment in Good Trade Policy

Ten incumbent members of Congress voted the fair trade position 100 percent of the time, and each of these – which include 8 Democrats, 1 Republican, and 1 Independent – were handily re-elected or promoted with wide victory margins. (Senator Russ Feingold (D-Wis.) is the only senator with an 100 percent fair trade record, and he did not face re-election this year.)

Here’s our Fair Trade Hall of Fame.
Sherrod Brown (D-Ohio), Ohio’s senator-elect – 12 point margin
Peter DeFazio (D-Ore.) – 26 point margin
Raúl Grijalva (D-Ariz.) – 24 point margin
Jesse Jackson, Jr. (D-Ill.) – 77 point margin
Walter Jones (R-N.C.) – 38 point margin
Marcy Kaptur (D-Ohio) – 48 point margin
Tim Ryan (D-Ohio) – 60 point margin
Linda Sánchez (D-Calif.) – 32 point margin
Bernie Sanders (I-Vt.), now Vt.’s senator-elect – 33 point margin
Ted Strickland (D-Ohio), now Ohio’s governor-elect – 23 point margin

Trade fallout from the midterms

Congressmen and women learned the trade-politics lessons of the mid-term elections, and the impact is being felt now - months before the advent of Democratic control in 2007:  Vietnam Trade Bill Goes Down to Defeat (Martin Crutsinger, AP via the Washington Post, Nov 14):

What the mid-terms mean for trade

Simon J. Evenett and Michael Meier of the Swiss Institute for International Economics have carefully reviewed (representative by representative and senator by senator - except Virginia, which hadn't been decided when they wrote) the trade stances of everyone newly elected to Congress, and the people they replace: The U.S. Congressional Elections in 2006: What Implications for U.S. Trade Policy? (November 9).

Here is their executive summary:

Trade implications of the mid-terms

On Monday, the Wall Street Journal carried a story on the roll of trade in the campaigns, written by Greg Hitt: Protectionist Stance Is Gaining Clout (Nov 6 - apparently free content).  Hitt hung his story on a House campaign in Iowa between  Democrat Bruce Braley...

October in Jeju: KORUS FTA - the 4th Session

Last week, from October 23 to 27, the U.S. and So. Korea held the 4th negotiating session on their proposed Free Trade Agreement. 

This post is a collection of links to, and "clippings" from, news coverage of the session.  Korean coverage of the negotiations was much more extensive and detailed than U.S. coverage, so the post may reflect Korean interests and perspectives disproportionately.   I'll update this post if I get new information.

The negotiations took place in the Korean city of Seogwipo on Cheju or Jeju Island.  This story from The Hankyoreh, "Jeju Island opposed to hosting FTA talks," explains that the Jeju government wanted to see the negotiations take place somewhere else, because they expect the FTA to hurt the local economy, particularly tangerine agriculture.   

As in earlier negotiating sessions, the round had a number of separate issue-oriented negotiating groups:  "The round will deal with 16 divisions, including commercial goods, agricultural products, and textiles, and working-level negotiations in automobile and pharmaceutical areas. Government procurement division negotiations were held separately in Geneva on October 16. " (4th Round of Free Trade Talks Begin , The Dong-A Ilbo, Oct. 23)  This Korean Embassy website lists all the different divisions of the negotiations, as they stood in the spring, and names the Korean and U.S. officials in charge of each: Free Trade Agreement .

My impression is that the negotiators were more upbeat after this round of talks than they had sometimes been, following earlier rounds.  The People's Daily Online (S.Korea says progress made in FTA talks with U.S.,  Oct. 28) quotes chief U.S. negotiator Wendy Cutler,

"In general, I think we moved forward the talks," said U.S. chief negotiator Wendy Cutler, who also works as assistant U.S. trade representative. "This is a big step forward from the previous rounds."

Cutler said considerable progress was made in customs, re- manufactured goods, administration of agricultural tariff rate quotas and anti-corruption provision during the talks. She acknowledged that wide gaps still remain in agriculture, industry and other sensitive sectors.

The chief Korean negotiator, Kim Jong-hoon, was also upbeat (Korea, U.S. Wrap up Fourth Round of FTA Negotiations with Practical Progress, Oct 27):

Kim Jong-hoon, chief negotiator for Korea to the bilateral trade negotiations, stressed at a new conference after the talks ended, “"During this round, Seoul and Washington have made practical headway," saying that the U.S. offered Korea an improved concession to cut tariffs on some 1,000 industrial goods, which include mobile phones and other high-tech products of great interest to Korea..

Cutler said that the U.S. delegation had about 100 members, drawn from almost 20 agencies.  Korea fielded a delegation of about 250 from 26 ministries, and 13 public institutions .... and 10,000 riot police (4th Round of Free Trade Talks Begin , The Dong-A Ilbo, Oct. 23); S. Korea-U.S. free trade talks resume, overshadowed by nuclear issue , The Hankyoreh, Oct. 22)

The day Cordell Hull put one over on Dean Acheson

Cordell Hull was FDR's Secretary of State from 1933 to 1944, an ardent advocate of liberal trading rules, and the man most responsible for the Reciprocal Trade Agreements Act of 1934 - landmark trade legislation leading to lower tariffs (Happy Birthday RTAA!, Ben Muse, June 12, 2006).

In late 1933, Dean Acheson, the future Secretary of State, was a Treasury Undersecretary. 

In the fall of 1933, Hull put one over on Acheson and the Treasury.  The occasion was a negotiation with the British over the disposition of World War I debts.  Michael Butler tells the story: