I read this little bit on a recent Thomas Sowell column. This is in essence why I adamantly disagree with affirmative action. Each person should be judged upon character and productivity, not skin color. We shouldn't lavish awards on certain races of people that would not be given to other races for similar accomplishments.
"In response to the news of President Obama receiving the Nobel Prize for peace, an e-mail from a reader recalled a black classmate's comments upon graduating high school many years ago. When asked to list the advantages and disadvantages of being black, the black student facetiously listed as an advantage 'being praised for infinitesimal accomplishments.'"
Tuesday, December 8, 2009
Joseph Stiglitz's How Globalization Works - Chapter 4
Stiglitz laments, “even if trade does follow, not everyone is a winner.” It is difficult to take the author seriously when this is a concern of his. Of course not everyone is a winner! Some companies produce terrible products; we don’t want them to win. We want companies to produce high quality products that we desire. As globalization continues, domestic markets are going to be shaken up due to the new recognition of more efficient industries abroad. If foreign unskilled lose their jobs, why should the domestic government care? It should only care about its own citizens.
He goes on to argue that rich nations should unilaterally open their economies developing nations, essentially providing unbalanced trade rules. I believe that this could actually be beneficial to a domestic economy. After all, if the developing nation is able to provide a better product than a previously protected domestic industry, then the domestic consumers are better off. If the developing nation is unable to provide a better product, then the domestic industry will have proven its worth to the domestic economy. Either way, the developing country is given a chance to grow and the domestic economy wins.
He goes on to argue that rich nations should unilaterally open their economies developing nations, essentially providing unbalanced trade rules. I believe that this could actually be beneficial to a domestic economy. After all, if the developing nation is able to provide a better product than a previously protected domestic industry, then the domestic consumers are better off. If the developing nation is unable to provide a better product, then the domestic industry will have proven its worth to the domestic economy. Either way, the developing country is given a chance to grow and the domestic economy wins.
Joseph Stiglitz's How Globalization Works - Chapter 3
Stiglitz writes that the Washington Consensus was idealistic economics that didn’t produce real-life success. He believes that most economists have gotten past the question of whether markets are inherently efficient and have moved on to “whether government can improve matters.”
He cites the growth of Asian countries as being the product of governments “choosing which sectors their countries would develop rather than leaving it up to only the market to decide.” The spillover effect supposedly increased returns from this policy since technologies developed in “chosen” industries could be applied to the castaway industries.
Stiglitz goes on to make the audacious claim that “it is important for countries to focus on equity, on ensuring that the fruits of growth are widely shared. There is a compelling moral case for equity…” He then concludes his chapter by saying; “it would be even better if we titled [the playing field] to favor the developing countries.”
This author would surely feel right at home in the former Soviet economy. His mind must be in a fantasy world to consider that equality is something to be obtained through markets or that governments choosing economic winners and redistributing wealth is morally desired.
The only way humans will ever all end up equal from an economic perspective is if no one has any economic assets at all. People are by nature selfish and equality should hardly be pursued. Rather, freedom of the individual to pursue economic wellbeing should be promoted.
Stiglitz clearly believes that national governments are in place to pursue equality of their own citizens as well as the good health of all foreign citizens. I fundamentally disagree with him on the grounds that national governments should simply promote freedom for its own people. They should be founded on the belief that all humans are selfish, not benevolent, as Stiglitz mistakenly believes.
He cites the growth of Asian countries as being the product of governments “choosing which sectors their countries would develop rather than leaving it up to only the market to decide.” The spillover effect supposedly increased returns from this policy since technologies developed in “chosen” industries could be applied to the castaway industries.
Stiglitz goes on to make the audacious claim that “it is important for countries to focus on equity, on ensuring that the fruits of growth are widely shared. There is a compelling moral case for equity…” He then concludes his chapter by saying; “it would be even better if we titled [the playing field] to favor the developing countries.”
This author would surely feel right at home in the former Soviet economy. His mind must be in a fantasy world to consider that equality is something to be obtained through markets or that governments choosing economic winners and redistributing wealth is morally desired.
The only way humans will ever all end up equal from an economic perspective is if no one has any economic assets at all. People are by nature selfish and equality should hardly be pursued. Rather, freedom of the individual to pursue economic wellbeing should be promoted.
Stiglitz clearly believes that national governments are in place to pursue equality of their own citizens as well as the good health of all foreign citizens. I fundamentally disagree with him on the grounds that national governments should simply promote freedom for its own people. They should be founded on the belief that all humans are selfish, not benevolent, as Stiglitz mistakenly believes.
Razeen Sally's New Frontiers in Free Trade - Chapter 5
Sally writes that Preferential Trade Agreements are generally hedges on the part of nations that see the WTO multilateral negotiations as weak and slow. These PTAs “secure preferential access to major markets and are a means of managing and defusing trade tensions with powerful players.” He states that these should ideally go above and beyond the liberalization that is agreed upon during multilateral negotiations.
These agreements are frequent in East and Southeast Asia between the booming markets. However, these agreements are proving to be generally ineffective because disciplinary action for lack of compliance is a weak force. Thus countries do not have strong incentives to abide by more than the original WTO agreements.
Of course it would be lovely if nations would act in less political of a manner during PTA negotiations and if they would abide by their self-imposed restrictions. But again, trade agreements between sovereign nations are secondary in the eyes of executives who want to be reelected and guard their respective nations. It seems that Sally is pushing political science to the wayside and writing idealistic views on these agreements.
These agreements are frequent in East and Southeast Asia between the booming markets. However, these agreements are proving to be generally ineffective because disciplinary action for lack of compliance is a weak force. Thus countries do not have strong incentives to abide by more than the original WTO agreements.
Of course it would be lovely if nations would act in less political of a manner during PTA negotiations and if they would abide by their self-imposed restrictions. But again, trade agreements between sovereign nations are secondary in the eyes of executives who want to be reelected and guard their respective nations. It seems that Sally is pushing political science to the wayside and writing idealistic views on these agreements.
Razeen Sally's New Frontiers in Free Trade - Chapter 4
Sally writes that the WTO provides a few advantages within trade but is currently neither being used efficiently nor effectively. He mentions that it helps governments fight foreign protectionist policies, hinders predation practices, and encourages good domestic policies. Yet two major problems are that the WTO is rather political and it is leading to too much standards harmonization.
He notes three ways to fix the WTO’s problems: “restore focus on a core market-access and rules agenda…. revive effective decisionmaking; and, not least, scale back ambitions and expectations.”
I believe that the WTO could theoretically be a helpful tool that fosters international trade. It should be used to fight members’ protectionism, as that is antithetical to globalization. However, it seems to be quite a lofty dream to believe that numerous countries could possibly sit down to negotiations and produce rules that are “fair” to each member. What is fairness anyway?
The most important prescription that Sally makes is that the WTO should have more modest expectations for future agreements. It should humbly recognize that sweeping multilateral agreements are not effective in a world full of selfish, sovereign nations. Instead it should seek to mediate between nations as they individually trade with others.
He notes three ways to fix the WTO’s problems: “restore focus on a core market-access and rules agenda…. revive effective decisionmaking; and, not least, scale back ambitions and expectations.”
I believe that the WTO could theoretically be a helpful tool that fosters international trade. It should be used to fight members’ protectionism, as that is antithetical to globalization. However, it seems to be quite a lofty dream to believe that numerous countries could possibly sit down to negotiations and produce rules that are “fair” to each member. What is fairness anyway?
The most important prescription that Sally makes is that the WTO should have more modest expectations for future agreements. It should humbly recognize that sweeping multilateral agreements are not effective in a world full of selfish, sovereign nations. Instead it should seek to mediate between nations as they individually trade with others.
Razeen Sally's New Frontiers in Free Trade - Chapter 3
Sally writes that liberalization critics should be silenced on multiple accounts. First, he notes that according to an OECD study, countries with liberal trade policies grow faster than less open countries. He cites Southeast Asia as a region that opened up its borders and provided incentives to invest in their markets. These countries subsequently had FDI-led growth according to Sally.
He writes that external shocks or crises can be beneficial to growth, as can mitigating the power of domestic interest groups. Strong institutions are seen more often in developed countries than poor countries and seem to provide the stability necessary to foster growth.
Sally provides a few ideas on how future liberalization can happen. First, he writes that “trade policy should be coupled strongly with competition-friendly measures to improve the domestic business climate.” Second and third, he requires that trade be seen “through the prism of the domestic economy” and that policy-making should be simple and transparent.
I generally agree with Sally on these issues. Waiting on non-governmental institutions to provide agreed upon resolutions for trade policy takes too long and inevitably does not properly look after the interests of each domestic economy. The US Senate writes up thousand page bills regarding health care that no one reads or can completely comprehend. This is not a good example for trade policy, although having politicians and NGOs draft trade agreements follows essentially the same process. Each government should make simple trade policies based on unilateral liberalization that echoes domestic economic policies.
He writes that external shocks or crises can be beneficial to growth, as can mitigating the power of domestic interest groups. Strong institutions are seen more often in developed countries than poor countries and seem to provide the stability necessary to foster growth.
Sally provides a few ideas on how future liberalization can happen. First, he writes that “trade policy should be coupled strongly with competition-friendly measures to improve the domestic business climate.” Second and third, he requires that trade be seen “through the prism of the domestic economy” and that policy-making should be simple and transparent.
I generally agree with Sally on these issues. Waiting on non-governmental institutions to provide agreed upon resolutions for trade policy takes too long and inevitably does not properly look after the interests of each domestic economy. The US Senate writes up thousand page bills regarding health care that no one reads or can completely comprehend. This is not a good example for trade policy, although having politicians and NGOs draft trade agreements follows essentially the same process. Each government should make simple trade policies based on unilateral liberalization that echoes domestic economic policies.
Razeen Sally's New Frontiers in Free Trade - Chapter 2
Sally demonstrates the mercantilist’s view of economics, only to slay each of its five tenets quoting classical economists as saying that mercantilism is economic nonsense. He instead believes in Adam Smith and David Hume’s line of classical liberal economics.
This school of thought requires that rule of law be established and argues that enacting free trade practices helps economies and is simply morally better than mercantilism because free trade is inherently non-discriminatory.
Sally states that protectionist arguments “presume too much government intelligence and capability, and overlook the probability of interest-group capture.” I wholeheartedly agree with Sally on this issue. Most politicians have law degrees and massive egos. Neither of these are proper prerequisites for choosing economic policies. The Soviet Union had geniuses run its economy into the ground with nice-sounding economic theories. The best domestic policies involve little government intervention, so too should the best trade policies.
This school of thought requires that rule of law be established and argues that enacting free trade practices helps economies and is simply morally better than mercantilism because free trade is inherently non-discriminatory.
Sally states that protectionist arguments “presume too much government intelligence and capability, and overlook the probability of interest-group capture.” I wholeheartedly agree with Sally on this issue. Most politicians have law degrees and massive egos. Neither of these are proper prerequisites for choosing economic policies. The Soviet Union had geniuses run its economy into the ground with nice-sounding economic theories. The best domestic policies involve little government intervention, so too should the best trade policies.
Joseph Stiglitz's How Globalization Works - Chapter 8
The problem that is looked at in this chapter is that poor countries receive too many loans, which they are not able to pay off. Stiglitz proposes the question, “Who is to blame? The lenders or the debtors?” He goes on to answer that both are to blame, however lenders should be held a bit more responsible. The goal of reform according to Stiglitz would be to have poor countries borrow less and have more of the risks shifted to the lenders.
Dr. Luis Maria Drago stated a century ago, in regards to Venezuela’s debt problems, that military intervention should not be considered a manner in which lender countries may seek repayment from debtors. This is based on the concept that all countries are sovereign and that lenders should create contracts that create incentives for repayment. But he goes on to say that Argentina defaulting on its debt got it to growth faster than any other policy would have. So he’s demanding that lenders give better terms but telling major debtors to default. This seems a bit lopsided in favor of the debtor.
Stiglitz also writes that countries should not be required to pay back odious debt and that an international bankruptcy court should be established.
Some of his ideas seem sensible, but it’s a cause for worry that nearly all of his suggestions are bent toward helping borrowers and hurting lenders. Also, his suggestion to create an international bankruptcy court may seem nice, but it is simply more wishful thinking to believe that such an institution would be efficient and/or authoritative.
Dr. Luis Maria Drago stated a century ago, in regards to Venezuela’s debt problems, that military intervention should not be considered a manner in which lender countries may seek repayment from debtors. This is based on the concept that all countries are sovereign and that lenders should create contracts that create incentives for repayment. But he goes on to say that Argentina defaulting on its debt got it to growth faster than any other policy would have. So he’s demanding that lenders give better terms but telling major debtors to default. This seems a bit lopsided in favor of the debtor.
Stiglitz also writes that countries should not be required to pay back odious debt and that an international bankruptcy court should be established.
Some of his ideas seem sensible, but it’s a cause for worry that nearly all of his suggestions are bent toward helping borrowers and hurting lenders. Also, his suggestion to create an international bankruptcy court may seem nice, but it is simply more wishful thinking to believe that such an institution would be efficient and/or authoritative.
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