Tag: trade

The Iowa Car Crop


“Looks like the Subarus are coming in great this year.”

According to an argument popularized by Steven Landsburg in The Armchair Economist, we have just discovered an amazing new technology. Some brilliant engineers have designed a big black box with secret, patented machines inside. This machine eats corn, and — after enough corn is consumed — it spits out a brand new car, like magic. You can even choose what kind of car you want: the color, engine, everything. The value of the corn the machine consumes is always less than value of the car it produces, so every time it is used, the wealth of society increases.

Member Post


Donald Trump has made public his policy proposals for immigration reform.  I checked the websites of the other candidates, and his is the most detailed proposal on immigration so far.  There are some items, such as e-verify, which I think most candidates would be in favor of.  For the purpose of this post, I focused on those items that I found […]

Join Ricochet!

This is a members-only post on Ricochet's Member Feed. Want to read it? Join Ricochet’s community of conservatives and be part of the conversation. Join Ricochet for Free.

On Innovation, Redistribution, and the ‘Veil of Ignorance’


IndianSlum_Flickr_8_3_2015-e1438616049740What kind of society would you desire if you had to enter it cold, sight unseen? The classic example: What would have been the opinion of antebellum slaveholders if there were an equal chance they would enter society as a slave owner or a slave? The “veil of ignorance” is a common philosophical thought experiment for helping determine the ethics of social arrangements or of an optimal social contract. More to the point today, what sort of modern welfare state would you want if you had an equal chance of possessing the sort of innate skills likely to gain you a high income in a particular society as of not having those skills? You might, perhaps, want a social contract that includes income transfers from high skill to low skill. A social contract with social insurance. But an interesting new paper out of the Minnesota Fed by V. V. Chari and Christopher Phelan wonders about incentive effects:

For instance, policy mechanisms that transfer income from highly skilled people to those with low innate skills frequently require progressive income taxes. Such policies affect incentives regarding the acquisition of skills through effort and education. If high incomes are highly taxed, high-innate-skills individuals may have less incentive to get, say, a medical degree. Economic arrangements seen as best using the behind-the-veil criterion typically trade off such output losses against the “insurance” or welfare gains associated with transfers. … A rich-country policy to tax high incomes will redistribute income (within that country) from those with high innate abilities (and, by assumption, with the ability to become highly skilled) to those with lower innate abilities. In so doing, that policy will reduce inequality within the rich country, but it will also create disincentives there to becoming highly skilled and thereby reduce the global supply of skilled workers. This reduced supply of skilled workers from the developed country then reduces opportunities for young workers in the poor country to become skilled. … We conclude that using the behind-the-veil-of-ignorance criterion to advocate for redistributive policies within developed countries while ignoring the effect of these policies on people in poor countries violates the criterion itself and is therefore fundamentally misguided.

Take the issue of trade. Many free trade opponents in advanced economies point out the economic impact on low-skill workers from having to compete with counterparts in emerging economies. But maybe this should count, too, as Chari and Phelan explain: “According to a World Bank Study, in the three decades between 1981 and 2010, the rate of extreme poverty in the developing world (subsisting on less than $1.25 per day) has gone down from more than one out of every two citizens to roughly one out of every five, all while the population of the developing world increased by 59 percent. This reduction in extreme poverty represents the single greatest decrease in material human deprivation in history.”

On the Downside of Being an Emperor in a Democratic Republic


ObamaChinHere’s some bad news for a Friday: you’re going to spend most of the weekend hearing about Nancy Pelosi. The House Minority Leader, her body temperature slowly elevated to allow full mobility and partial sentience, took to the floor of the lower chamber earlier today to come out against trade adjustment assistance (TAA) in the run-up to the vote to give President Obama fast-track authorization to negotiate the Trans-Pacific Partnership trade agreement.

Now, TAA, which provides government resources for workers dislocated by international trade, is normally popular with Democrats. But Pelosi didn’t take this position on the merits. Knowing that the passage of TAA would be essential for getting Democrats behind the Trans-Pacific deal, she was trying to smother the effort in the crib. As she said on the House floor,“If TAA slows down the fast-track, I’m prepared to vote against TAA.” And she got her way: it went down handily in the House, losing the vote 126-302.

There are a couple of easy journalistic frames coming here: progressives are abandoning the president in much the same way that conservatives took their leave of George W. Bush towards the end of his administration; The Obama Administration is officially sliding into lame duck territory; With Obama in the home stretch and Harry Reid preparing to retire, Pelosi is now the de facto leader of the Democratic Party. Choose your own adventure.

The Battle on the Left: Inequality Democrats vs. Innovation Democrats. Which Will Hillary Be?


pacific_trade_shutterstock_022315Yesterday was a bad day for the big Pacific trade deal as “Senate Democrats blocked consideration of giving President Obama power to accelerate a broad trade accord with Asia, a rebuke that the president helped bring on himself,” the New York Times writes. No, the deal is not dead, but the timing is getting funky with summer almost here — not to mention the political difficulties of the approaching election year. Beyond that, there is a fascinating Democrat vs. Democrat dynamic developing, which the trade troubles reflect. This Politico piece on the party’s internal struggles is amazing:

In the fourth quarter of his presidency, without another race to run, Barack Obama has gone to war with what he sees as an out-of-touch, stuck-in-old-thinking Washington liberal elite — Elizabeth Warren’s the most famous member, but AFL-CIO president Richard Trumka and a coterie of Hill Democrats are up there with her. Obama advisers say the president sees Democratic opponents of his trade agenda as just as detached from reality as Republicans in Congress who held four dozen Obamacare repeal votes or turned raising debt ceilings and fiscal cliffs into government crisis carnivals. … For Obama, there’s a direct connection between bringing the Democratic Party into the 21st century on trade and his sense of himself as ushering in a generationally transformative foreign policy. Aides say Obama views both ideas as pragmatic, dealing with the reality in front of him. Both are about engagement. Both are about what he says is an orientation toward the future instead of sticking with the ways of the past. You can’t be a progressive on trade, he believes, unless you’re willing to talk about a new way to make trade actually work.

Well, there goes the GOP theory that the trade push is just some elaborate charade since someone as far left as Obama couldn’t possible want a free trade deal. This piece makes Obama out to be more technocratic, third-way guy than hard lefty ideologue. More Tony Blair than Ed Miliband, you might say. At least on this issue. And certainly not Bill de Blasio.

The Sweetest Racket


shutterstock_202875223My wife and I have different approaches when it comes to the kids and dessert. She, in some attempt to instill “discipline,” rations out the sweets as if we were under a medieval siege. I — being a liberty-minded person, as well as a spineless spoiling squish — play the part of Willy Wonka without the army of creepy Oompa Loompas. There are good reasons for my approach. For one, I figure there is only going to be enough money for one of us in our old age and I don’t want the kids voting me into the government-run home. Second, my childhood meals were a bit like Lord of the Flies (without the bloodthirsty murders) and I was allowed to consume Pixy Stix as a palate cleanser in between courses of Fun Dip. This contributed to my juvenile cavities, but has turned me off to sugar to the point that I’ll opt for an after-dinner drink over any sort of sweet (though this comes with its own risks, as quickly-ordered slices of cake are less likely to run to $65 each than certain kinds of cognac).

Even as someone who passes on dessert, however, I can’t help but have my blood sugar boil over America’s sugar tariffs. These ridiculous taxes began in the late 18th Century — talk about a government program we can’t get rid of! — and have resulted in U.S. sugar prices often being twice what the rest of the world pays. Now, you might think, “Who cares, Pants? I can see the size of those pleats, and you don’t need any additional cheap carbohydrates in your diet.” Fair enough. But in typical government fashion, this market distortion causes inefficiencies and makes artificial winners and losers. The winners are the roughly 5,000 U.S. sugar producers ,while the losers are the remaining 319,995,000 or so of us. The worst hit are U.S. candy manufacturers and those who they’ve laid off since moving their factories overseas, where sugar can be purchased at market rates. Add to this all the bakers, corner candy stores, Dunkin’ Donuts franchisees, and kids who just want to enjoy a Twinkie between their extremely low-calorie, public school-sanctioned lunch and their fifth period class on historical grievances, and you can see how the losers in this game pile up.

Not to mention the unintended consequences. Thanks to stupid policies that jack up the price of sugar and subsidize the costs of corn production, we end up with unholy products like high fructose corn syrup added to our soda instead of sugar — the way the Good Lord intended it to be sweetened. The other side may like to talk about income gaps, but the sugar protections they support prop up the income of a privileged few at the expense of millions of working Americans.

The Economics of The Walking Dead


250px-PhilipBlakeTFGAs has been pointed out in nearly every commentary on AMC’s The Walking Dead, the series is best when it focuses less on the horrors of shambling zombies than on those committed by survivors against each other.

Through the first two seasons, most of these came from hot-blooded emotions such as fear and desperation; ordinary people making bad — even evil — decisions under duress, rather than out of malice. That changed in the third episode of the third season with introduction of Philip Blake, aka the Governor.

A former nobody, Blake rose to be the leader of the biggest and most successful survivor camp in the region. Under his leadership, the town of Woodbury remains safe, open, and well-fortified; if you looked past the barricades and the piles of undead that are stacked around them, the place almost looks cute.

Member Post


Israel isn’t just losing allies. They are losing vital trading partners.  Secretary of State for Business, Innovation, and Skills and Liberal Democrat MP Vince Cable announced this week that the United Kingdom would suspend the export licenses of 12 British firms which send Israel arms like radar systems, aircraft, and tanks if any new hostilities […]

Join Ricochet!

This is a members-only post on Ricochet's Member Feed. Want to read it? Join Ricochet’s community of conservatives and be part of the conversation. Join Ricochet for Free.

Member Post


As of this fall, my First Generation iPad, bought the first week they went on sale, will cease to be upgradeable.  I intend to buy a latest-generation one to replace it.  I can get up to $200 in trade at Apple.  Or I can just keep it as a collector’s item and pay full price […]

Join Ricochet!

This is a members-only post on Ricochet's Member Feed. Want to read it? Join Ricochet’s community of conservatives and be part of the conversation. Join Ricochet for Free.