Monday, January 10, 2005


That evil capitalism! "It should come as heartening news that 2004 was one of the most prosperous years in history. Not because the U.S. economy grew by a solid 4.3 percent, but because developing countries experienced an explosive 6.1 percent economic growth. According to a recent study by the World Bank, 2004's growth reflected "an expansion without precedent over the past 30 years." Equally encouraging, the report notes that "the rapid growth of developing economies ... has produced a spectacular, if not historic, fall in poverty." Amazingly, the World Bank report did not get much coverage in our mainstream media. It seems the press was more interested in covering the evils of globalization than in taking notice of how world trade -- which grew by an astounding 10.2 percent this year -- is driving economic growth.... In fact, the recent success of developing countries at fighting poverty could be an Economics 101 lesson for today's American classroom. In East Asia and the Pacific region alone, the number of poor dropped from 472 million in 1990 to 271 million in 2001. By 2015, that number should shrink to 19 million, according to the World Bank.

"Buy American" hurts Americans: "President Bush has a plan to address the so-called trade deficit, which worries people so much. According to the wire services, Bush said, 'People can buy more United States products if they're worried about the trade deficit.' That will appeal to many Americans in a nationalistic fever. What could make them feel better than passing up inexpensive, high-quality, foreign-made products and buying pricier, American-made counterparts? But it won't help the economy or the American people in general. Frankly, I can't tell whether President Bush is kidding or not."

Big shrimp: A protectionist mess: "Critics often accuse free trade proponents of carrying water for big business. But maybe unrestricted trade isn't always in the best interest of all business. Manufacturers who use steel (car and appliance makers, for example) oppose tariffs on imported steel. However, steel producers of course support them, as they keep competitive foreign steel off the market. While the car maker might opposed steel tariffs, they might support tariffs on foreign-made cars -- to protect their share of the domestic market. And steel manufacturers would likely oppose them, as they make it more difficult to sell U.S. steel overseas. Protectionist policies often become quite convoluted. Recent shenanigans from the U.S. shrimp industry present an excellent opportunity to examine how big business' support for free trade isn't as firm as conventional wisdom might suggest."

Rent control to go? "Rent control perversely hurts the very people it is supposed to help. New York City, for example, is chronically short of housing, and rents are outrageously high. Many New York apartments are "rent stabilized." It's no surprise that developers prefer to build condominiums or cooperatives, which they can sell outright. Such sales give them real profits-- or at least the prospect of gains--and none of the risks of politicians forcing them to charge rents that are not economical. Chicago, in contrast to New York City, has no rent control, and it has abundant housing for all levels of income earners. Free markets work when politicians allow them to.... the state of Hawaii put a cap on the amount of rent that oil companies can charge their service stations. A federal court has recently ruled that form of rent control as being unconstitutional, saying that such a cap discourages investment and therefore leads to fewer independent dealers. If the Supreme Court upholds this finding, then rent control in New York City and elsewhere could very well fall by the wayside.

Old jobs have to go: "Saving time and freeing up resources for other, more efficient uses, is good. Sure there is displacement and alienation: 50-year-old pipe-fitters who may never again make union scale and parents who rarely see their infants awake. But -- and I apologize for being so presumptuous at my still tender age -- that's the way the world works. Would we prefer to be in stasis and consign the next generation to dead-end jobs at best? Or to deny young people the opportunity to give their progeny the material comforts and fancy educations they may have lacked growing up? Or maybe we should skip the industrial revolution too and have everybody working the fields: full employment!"


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