tag:blogger.com,1999:blog-53972347866504317702011-12-22T14:11:06.019-05:00Musings about international economics, globalization and some other things.Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.comBlogger931100tag:blogger.com,1999:blog-5397234786650431770.post-44203616230433027842011-10-05T19:44:00.000-05:002011-10-05T19:44:27.728-05:00

The US is the largest economy in the world. Sure China may be number two, but when you consider it in per capita terms the US is near the top and China is closer to 100 in rank. The US has the most integrated market, its labor force is highly skilled and flexible, it has innovative entrepreneurs that are the envy of the world, it has a smoothly functioning and reliant legal system, it

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com1tag:blogger.com,1999:blog-5397234786650431770.post-76696010708622369862011-09-30T16:34:00.000-05:002011-09-30T16:46:10.122-05:00

As economic troubles around the world continue to mount there is increasing pressure upon politicians to do something forceful to revive their economies while deflecting criticism from themselves. One traditional method has always been to blame foreigners for one’s domestic troubles. In the 1980s the US blamed Japan and worried that its economic strength would soon lead to a diminished US

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com3tag:blogger.com,1999:blog-5397234786650431770.post-60745836289415755682011-09-18T20:51:00.000-05:002011-09-18T20:51:43.534-05:00

For a competitive 3rd party to arise it will have to have a unifying theme that can be used to establish positions across a range of economic and social issues.  To be effective, that theme will have to attract supporters from the right and the left.  Perhaps the best candidate for that unifying theme is the growing disdain the general populace has for special interests.  Conservatives and

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com0tag:blogger.com,1999:blog-5397234786650431770.post-43263102110758949882011-08-30T11:47:00.002-05:002011-08-30T12:55:29.545-05:00

The hype and hoopla about Hurricane Irene this past weekend offers a potential window into understanding the global climate change debate … but not because of claims that this is evidence of climate change itself but rather because the reaction to the hurricane represents a natural human response in this day and age. As the hurricane developed and approached there was an impressive display of

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com0tag:blogger.com,1999:blog-5397234786650431770.post-54396585238790781722011-08-27T13:16:00.002-05:002011-08-27T13:29:36.231-05:00

The Wall Street Journal this week suggests that we should “Expect a Third-Party Candidate in 2012.” The authors claim the US is “in the midst of what we would both call a prerevolutionary moment, and there is widespread support for fundamental change in the system. An increasing number of Americans are now searching beyond the two parties for bold and effective leadership.” This idea is a

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com0tag:blogger.com,1999:blog-5397234786650431770.post-40301787306181500622011-08-17T21:23:00.001-05:002011-08-17T21:35:37.036-05:00

For over a year now we have been hearing about the government debt problems in Europe; especially in Greece, but also in the larger economies of Ireland, Portugal, Spain, Italy and even France. Greece’s outstanding public debt is now about 150% of its annual GDP. In Italy it is over 120%, in Ireland about 95%, France 85%, Portugal 82% and Spain 65%. These worries and figures invite

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com1tag:blogger.com,1999:blog-5397234786650431770.post-10120032803556554722011-08-15T19:32:00.002-05:002011-08-15T20:45:04.441-05:00

One of the main reasons for the unemployment problem around the world is excessive debt. Only when we eliminate the underlying source of our problems will we be able to sustainably reduce the unemployment rate. In my last post about debt I talked about mortgage debt. This post is about government debt. Consider the Greek debt problem. Examples of Greek government largesse are easy to find

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com3tag:blogger.com,1999:blog-5397234786650431770.post-38799902968578938532011-08-13T07:35:00.004-05:002011-08-13T09:11:39.257-05:00

A Politco story released this week regarding comments by S&P senior director Joydeep Mukherji is being used to suggest that Tea party intransigence is the root cause of the debt downgrade. However, I think the finger is really pointing at the Administration instead. Joydeep Mukherji said the stability and effectiveness of American political institutions were undermined by the fact that “people

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com4tag:blogger.com,1999:blog-5397234786650431770.post-7024673588919689772011-08-12T09:35:00.001-05:002011-08-12T09:39:18.681-05:00

In the national conversation about the economy the continual refrain is that we need to create more jobs. However, one of the main reasons for the unemployment problem around the world is excessive debt. Only when we eliminate the underlying source of our problems will we be able to sustainably reduce the unemployment rate. A little bit of debt is never a problem. Most households borrow

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com3tag:blogger.com,1999:blog-5397234786650431770.post-21460534421267137072011-08-08T22:07:00.004-05:002011-08-09T06:57:48.973-05:00

The economic news is riveting this week especially to an economist, but it amazes me all the BS I hear and read about as people are asked to assess the situation. Harry Frankfurt, a Princeton philosophy Professor, wrote a brief treatise titled “On Bullshit” a few years ago in which he tried to answer an obvious question, “Why is there so much BS out there?” One answer he gave was that too many

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com0tag:blogger.com,1999:blog-5397234786650431770.post-33217504342478755172011-08-07T10:55:00.002-05:002011-08-07T13:59:16.592-05:00

As we come out of the debt ceiling debate in the US Congress and face the prospect of a word economy that seems destined to remain in the doldrums for some time to come, the debate over what to do next is heating up. Should we ignore the budget deficit and debt issues and go all in for anther massive government spending program to kick start the economy as economists like Paul Krugman suggest?

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com3tag:blogger.com,1999:blog-5397234786650431770.post-80750827221689412022011-05-09T12:24:00.002-05:002011-05-09T13:34:15.972-05:00

Paul Krugman has an interesting piece in the NYT today titled The Unwisdom of Elites. In it he argues that policy elites are increasingly blaming the slow recovery and the other economic problems we face today on the general public. He writes that "the policies that got us into this mess weren’t responses to public demand. They were, with few exceptions, policies championed by small groups of

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com3tag:blogger.com,1999:blog-5397234786650431770.post-34724271913364252242011-04-26T12:20:00.001-05:002011-04-26T12:21:54.131-05:00

Read my article "Is Greed the Problem with Capitalism" at Liberty Magazine online and decide for yourself.

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com0tag:blogger.com,1999:blog-5397234786650431770.post-84851517071303031572011-04-05T16:08:00.002-05:002011-04-05T16:14:15.314-05:00

We read a lot about excesses these days: excess government spending, excess budget deficits, excess money supply expansions, excess foreign exchange reserves. One other excess worth watching in the US is excess bank reserves over and above the banks’ required reserves. These excess reserves could unleash a torrent of economic activity and spark the rapid inflation that some say is imminent.

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com7tag:blogger.com,1999:blog-5397234786650431770.post-68448042556767466772011-02-25T09:58:00.003-05:002011-02-25T10:41:54.051-05:00

In Alan Blinder’s commentary today, "The Economic Silly Season is Upon US," in the WSJ, he emphasizes how “silly” legislators have become in their proposals and debates. It is true that politics often does seem absurd, but rather than pointing fingers and calling people silly, it would behoove us to try to understand the constraints imposed in the political system that lead legislators into

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com0tag:blogger.com,1999:blog-5397234786650431770.post-71740482596190456732011-02-18T19:06:00.001-05:002011-02-18T19:07:50.971-05:00

The recent protests in Wisconsin by public sector employees against the proposed increases in employee pension and health care contributions may just be the first of the budget battles we will soon see spreading across the US. The news event also offers an opportunity to reconsider the advisability of public sector unions. A standard argument for the right to form unions is that they provide

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com1tag:blogger.com,1999:blog-5397234786650431770.post-65245310104665366592011-02-13T20:49:00.001-05:002011-02-13T20:49:50.758-05:00

Private businesses are continually subjected to the vagaries of the market. While demand may grow steadily for long periods, unexpected shocks invariably hit from time to time. The 2008 recession is the latest episode of falling demand in a wide range of industries. The immediate effect for business is falling sales and reduced revenue. To remain in operation, businesses have no choice but to

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com0tag:blogger.com,1999:blog-5397234786650431770.post-49294606608622548122011-01-14T10:15:00.002-05:002011-01-14T10:23:22.174-05:00

In his NYT column (Jan 14, 2011), Paul Krugman explains why he believes we are a “deeply divided nation and are likely to remain one for a long time.” He sees a moral divide that admits to no middle ground. He writes:“One side of American politics considers the modern welfare state — a private-enterprise economy, but one in which society’s winners are taxed to pay for a social safety net —

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com1tag:blogger.com,1999:blog-5397234786650431770.post-15987036327110579582011-01-14T09:14:00.002-05:002011-01-14T09:19:16.642-05:00

In a Dec 19 column, The Bipartisanship Racket, Frank Rich highlights precisely what is needed to bridge the divide between the hyperpartisan right and left; a common enemy. That enemy is the process in which, “both parties are bought off by special interests who game the system and stack it against the rest of us.” Can’t all sides agree that when organizations use lobbyists to bend the rules in

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com0tag:blogger.com,1999:blog-5397234786650431770.post-89150568199198064222010-12-21T11:26:00.000-05:002010-12-21T11:27:14.805-05:00

See the letter to the Washington Post on Mon., Dec 19 here: http://www.washingtonpost.com/wp-dyn/content/article/2010/12/19/AR2010121903461.html

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com0tag:blogger.com,1999:blog-5397234786650431770.post-40903387507662352552010-12-13T09:05:00.002-05:002010-12-13T09:30:44.959-05:00

The WSJ posts two enlightening articles today. The first is by Gov. Tim Pawlenty about the inappropriateness of government unions and how generous States and the federal government have been in raising the pay and the benefits of many government workers. The extent of this problem is new to me in the past year and it represents a huge growing burden on the health of the economy. Pawlenty is

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com0tag:blogger.com,1999:blog-5397234786650431770.post-9833966108758321822010-12-10T07:35:00.011-05:002010-12-10T08:16:36.891-05:00

Following up on yesterday's post there is another way to look at the extent of the fiscal stimulus effects during the economic downturn and recovery. Remember that stimulus spending over two years or so was about $800 billion in total, which is about 6% of annual GDP.The BEA publishes a table each quarter highlighting the contributions to growth of each component of our GDP. For example, in

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com0tag:blogger.com,1999:blog-5397234786650431770.post-21933914447966472592010-12-09T09:21:00.003-05:002010-12-09T10:11:24.077-05:00

The WSJ posts a very informative description of the government spending effects of the stimulus package today. The overall size of the stimulative effect ... virtually, nada, nothing! Allow me to elaborate by offering a few additional stats from BEA's NIPA data.Between 2008 Q3 and 2010 Q3 (in annualized levels)Total Gov Consumption (Fed + State & Local) rose $75 billionFed Gov Consumption rose

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com0tag:blogger.com,1999:blog-5397234786650431770.post-41335215266828300122010-11-13T10:02:00.001-05:002010-11-13T10:04:18.064-05:00

See the letter to the Washington Post on Wed., Nov 3 here: http://www.washingtonpost.com/wp-dyn/content/article/2010/11/03/AR2010110307478.html

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com1tag:blogger.com,1999:blog-5397234786650431770.post-36710824779736902712010-11-01T08:26:00.002-05:002010-11-01T09:00:17.543-05:00

Paul Krugman has another piece today in the NYT about the need for more government stimulus. So again I want to suggest conditions under which the Krugman stimulus would work and conditions under which it would not work. The key, I think, is the effect the stimulus has on people's confidence and expectations of the future. In my last post I emphasized that because citizens see a ballooning

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com0tag:blogger.com,1999:blog-5397234786650431770.post-47965291585786346302010-10-29T20:00:00.002-05:002010-10-29T20:06:40.505-05:00

One of the key macroeconomic policy decisions looming is whether to implement another fiscal stimulus program. Because unemployment remains stubbornly high, many are contemplating the advice of Paul Krugman that not only is more stimulus called for but the original stimulus plan back in 2009 was too restrained. The logic behind the stimulus is straightforward. Because households have become

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com1tag:blogger.com,1999:blog-5397234786650431770.post-78915482998552117892010-10-06T10:56:00.002-05:002010-10-06T12:14:36.247-05:00

James Taranto’s discussion of Green Supremacists in the WSJ highlights an interesting phenomenon in public discourse today; the mixing of comedy and political commentary. Of course in one sense there is nothing new since comedians going back to Johnny Carson, Jack Paar and Groucho Marx have poked fun at politicians. What’s different today is that many comedy shows are designed to look like

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com1tag:blogger.com,1999:blog-5397234786650431770.post-77570348647606179852010-09-27T08:49:00.002-05:002010-09-27T09:16:44.586-05:00

The intensity of debate over the US-China trade relationship was racheted-up this past week especially regarding the pressure for China to revalue its currency. The clarions call in the US is to charge China with being an unfair currency manipulator. China’s response has largely been to take more WTO-legal trade remedy actions against the US, or to file complaints about US trade remedy actions

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com2tag:blogger.com,1999:blog-5397234786650431770.post-77603490498081457592010-09-25T20:43:00.002-05:002010-09-25T20:59:11.340-05:00

Yesterday Oliver Stone’s sequel to Wall Street, Money Never Sleeps, opened in theaters around the country. In it America will hear Hollywood’s usual message; finance and business is evil and greed is the culprit. The movie is set in 2008 just before the financial crisis hit. Gordon Gekko (Michael Douglas) is out of jail after doing prison time for insider trading and is on a book tour. His

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com2tag:blogger.com,1999:blog-5397234786650431770.post-28737986575031613382010-09-20T07:37:00.002-05:002010-09-20T07:51:59.869-05:00

The US trade deficit with China has become a lightning rod for discontent in the US Congress especially since the Chinese have responded so slowly to US requests/demands to revalue their currency. Indeed everyone seems to accept that the undervalued yuan is, at the least, responsible for our slow recovery and, at the most, is a major cause of the global imbalances that set off the economic

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com0tag:blogger.com,1999:blog-5397234786650431770.post-73372387231164184552010-09-17T07:34:00.002-05:002010-09-17T08:20:14.755-05:00

The WSJ has a good piece today (China's Real Monetary Problem) providing better details about problems associated with the fixed value of the Chinese yuan. In particular the article explains the process of sterilization. Let me elaborate on some of the details. (see here for a textbook version of this)In China's case for the past 10 years or so, there has been an excess demand for yuan on the

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com0tag:blogger.com,1999:blog-5397234786650431770.post-40538752580381660082010-09-09T12:02:00.001-05:002010-09-09T12:10:30.045-05:00

In the first chapter of my Trade text book I describe the WTO; how and why it was set up and how it works today. The section is meant to clear up some of the misunderstandings and misrepresentations that are common about the WTO. This week I came across a prime example on an internet blog post titled “Globalism Destroys America: 10 Reasons why the World Trade Organization is Bad for America.”

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com0tag:blogger.com,1999:blog-5397234786650431770.post-69959491201945655752010-01-20T15:54:00.003-05:002010-01-20T16:11:39.883-05:00

I received the following request that I am happy to post. A return to normalcy is going to take a long time in Haiti and relief crews will need resources long after the event has passed. Please consider donating to the following organization.International Medical Corps is a global, humanitarian, nonprofit organization, founded by volunteer doctors and nurses and dedicated to saving lives and

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com0tag:blogger.com,1999:blog-5397234786650431770.post-88821335587825630052009-12-03T06:04:00.003-05:002009-12-03T06:32:22.742-05:00

As I was reading the WSJ article today on the new doubts about the credibility of climate science I thought this situation might be analogous to something in the science of economics: the distinction between micro and macro. First, it is easy to see the amazing advances of science right before our eyes. Science has made the computer and television and cellphones and airline travel and all sorts

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com1tag:blogger.com,1999:blog-5397234786650431770.post-89160965654762975042009-11-27T10:02:00.003-05:002009-11-27T12:41:53.020-05:00

Charles Krauthammer's appeal today for three simple fixes to our current health care problems seems perfectly sensible, reasonable and low in risk. Although these fixes (malpractice reform, interstate competition and deductability reform) even if well designed and fully implemented may not solve all of the problems with the health care/health insurance system, they are likely to step the system

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com1tag:blogger.com,1999:blog-5397234786650431770.post-60183514381038258842009-11-19T07:18:00.004-05:002009-11-19T07:54:29.128-05:00

An article in the WSJ by Ron Paul and Jim DeMint today discusses the issues of FED independence and transparency. They mention a "puzzling assertion made by the Fed and its supporters ... that the Federal Reserve has some sort of independence from the government." They continue to argue that the FED is not independent, but instead is a government run monopoly whose mandate to maintain stable

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com1tag:blogger.com,1999:blog-5397234786650431770.post-63495451194800490982009-11-12T07:12:00.002-05:002009-11-12T07:51:06.046-05:00

The Wall Street Journal today has two opinion pieces that highlight hidden details of the House health care bill that may have a major impact. The first article identifies a 69% capital gains tax increase that will hit high income individuals as of January 2011. The second identifies a nod to the trial lawyers that would encourage states to "identify an alternative medical liability law" to

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com3tag:blogger.com,1999:blog-5397234786650431770.post-1378645751143079312009-08-20T14:10:00.001-05:002009-08-20T14:16:07.794-05:00

I have to admit that this whole health care debate confuses me. I understand some of the main problems with the current system; things like non-portability of insurance across jobs and across states, the high incidence of medical malpractice lawsuits, the large numbers of people uninsured, and the rapidly rising costs. Clearly the current system has major problems and may be unsustainable in

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com11tag:blogger.com,1999:blog-5397234786650431770.post-87063581738764418432009-06-29T08:35:00.003-05:002009-06-29T08:56:23.735-05:00

The WSJ has an opinion piece today about how US legislation intended to clean up the environment and reduce our dependence on foreign oil led to windfall subsidies for the US paper industry inspiring a paper subsidy retaliation by our Canadian neighbors. This trade skirmish is an obvious example (i.e., obvious after the fact) of how difficult it is to predict the full consequences of particular

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com0tag:blogger.com,1999:blog-5397234786650431770.post-22457069132803767312009-06-22T07:21:00.003-05:002009-06-22T08:01:50.289-05:00

Last week we heard the announcement of Allen Stanford's arrest for perpetrating a ponzi scheme that defrauded investors of billions of dollars. Last year we saw the arrest of Bernie Madoff who purportedly instigated an even larger ponzi scheme. But of course, the largest ponzi scheme of all lies right in front of our eyes in full view. It's the US government welfare scheme set up years ago.

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com1tag:blogger.com,1999:blog-5397234786650431770.post-63883674961711562112009-06-11T07:00:00.002-05:002009-06-11T07:56:03.454-05:00

George Will notes in his column today,The cap-and-trade legislation passed recently by a House committee is Smoot-Hawley in drag: It contains provisions for tariffs on imports designated "carbon-intensive" -- goods manufactured under less carbon-restrictive rules than those of the proposed U.S. cap-and-trade regime. Eco-protectionism is a recipe for reciprocity.For more information check out the

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com1tag:blogger.com,1999:blog-5397234786650431770.post-61908754212133323342009-06-03T08:51:00.006-05:002009-06-04T18:17:34.213-05:00

There is an excellent exchange between prominent experts (Bill Bradley, Niall Ferguson, Paul Krugman, Nouriel Roubini, George Soros, Robin Wells) about the causes and prospects of the current economic crisis. It is titled "The Crisis and How to Deal with It" and appears online at the NY Review of Books.Reading it made me think about an analogy between the progression of the world economy and

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com1tag:blogger.com,1999:blog-5397234786650431770.post-51690221904157402572009-05-21T06:27:00.002-05:002009-05-21T06:54:32.343-05:00

This week listening to the radio I heard the cap and trade system described as something that would raise the price of carbon-based energy while lowering the cost of alternative energy. That cap and trade will raise carbon-based energy prices is correct. However, that cap and trade will lower alternative energy prices is correct only if one makes several other assumptions. First, the statement

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com3tag:blogger.com,1999:blog-5397234786650431770.post-63412536629185963432009-05-20T14:56:00.003-05:002009-05-20T15:27:08.874-05:00

Yesterday's FT article by Gary Becker and Kevin Murphy titled, "Do not let the 'cure' destroy capitalism" is worth reading. In it they highlight three basic flaws with the current approach to the crisis. They area) an overly broad diagnosis of the problem,b) a misconception that market failures are readily overcome by government solutions, andc) a failure to focus on the long-run costs of

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com4tag:blogger.com,1999:blog-5397234786650431770.post-52990533044518954532009-05-06T07:33:00.004-05:002009-05-06T08:36:05.915-05:00

The two sides in debate about climate change and the proposed response of a cap and trade system are represented by two recent opinion pieces in the WashPost. Robert Samuelson presents the skeptical view in an April 29 article Selling the Green Economy. Kristen Sheeran and Mindy Lubber offer a rebuttal in the May 6 article The Cost of Climate Inaction.My objective in this post is to highlight

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com0tag:blogger.com,1999:blog-5397234786650431770.post-6727318783315428022009-05-04T06:02:00.003-05:002009-05-04T06:25:17.573-05:00

Allan Meltzer has an excellent article in the NYT today about the possibility of inflation. It isn't here yet but given the underlying conditions of high money supply (and low interest rates) and high budget deficits, inflation may come much faster than the FED is able and willing to respond effectively.On the same day Paul Krugman warns in the NYT about the problems of wage deflation. He

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com0tag:blogger.com,1999:blog-5397234786650431770.post-69197770989360893472009-04-27T12:02:00.004-05:002009-04-29T10:19:01.118-05:00

This week I had the opportunity together with other local scholars to meet with Chinese trade officials visiting Washington DC to discuss the economic crisis. Commerce Minister Chen Deming's article in the WSJ about the rise of protectionism includes some points raised in the discussion. Other topics for discussion include the following questions for which I offer some observations.1. Recently

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com5tag:blogger.com,1999:blog-5397234786650431770.post-5583787926574713592009-04-23T08:51:00.003-05:002009-04-23T11:51:11.834-05:00

In a comment a reader asks the following: “I still propose that until the detrimental distortions of our internal protectionism is fully understood, external protectionism cannot be fully understood either. My intuition is that they are inextricable, and that their effect on GDP and employment can only be understood if both "protectionisms" are studied as an intertwined entity.My response: I

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com2tag:blogger.com,1999:blog-5397234786650431770.post-83654366394224201792009-04-06T08:36:00.003-05:002009-04-06T08:57:50.236-05:00

There is an excellent article in the WSJ today by Steven Gjerstad and Vernon Smith discussing the origins of the housing bubble. It offers a convincing case for why this housing bubble which so far has caused the loss of about $3 trillion in housing wealth has had a more depressing effect on the economy than the dotcom bubble in 1999-2002 that resulted in a loss of about $10 trillion in wealth.

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com2tag:blogger.com,1999:blog-5397234786650431770.post-78544079364110805622009-03-30T06:53:00.003-05:002009-03-30T14:02:23.613-05:00

In a time of recession, as economic growth stalls and unemployment rises, the safety and security of workers becomes preeminent. Indeed a kind of economic nationalism develops quickly as the public demands that all government interventions are targeted to favor domestic workers and businesses.Hence, the new US government introduced "Buy American" provisions in its fiscal stimulus package, it is

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com3tag:blogger.com,1999:blog-5397234786650431770.post-75873327183127478132009-02-13T07:27:00.006-05:002009-02-23T15:39:18.722-05:00

The NYT posted a pro and con debate about the Buy America provisions in the fiscal stimulus package. I can will add one point to the debate. First, it is important to note that many less developed countries have much more leverage to increase their protection of imported goods without violating their WTO commitments. That's because many have their applied, or actual, tariffs set lower than

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com3tag:blogger.com,1999:blog-5397234786650431770.post-66521513974201841492009-01-27T13:53:00.001-05:002009-01-27T13:55:34.592-05:00

Let me return to the idea raised in Fiscal Stimulus - Part 1, namely the theory of the second best. This theory offers a guide that is widely applicable to many different situations. It says that policy interventions by government will be most efficient, and therefore work most effectively, if they are targeted most directly at the source of the current problems. Thus, we can ask, in terms of

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com2tag:blogger.com,1999:blog-5397234786650431770.post-53454486511992029392009-01-21T07:47:00.002-05:002009-01-21T07:56:13.603-05:00

Milton Friedman and Anna Schwartz’s Monetary History of the US motivated the conventional wisdom about the Great Depression, that is, that it was caused primarily because of low money growth and exacerbated by several other things including attempts to balance the government budget, protectionism via Smoot-Hawley tariffs, and of course the tremendous loss of confidence in banks leading to

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com1tag:blogger.com,1999:blog-5397234786650431770.post-85957299901770158602009-01-13T21:48:00.004-05:002009-01-13T23:14:36.552-05:00

Here's the logic behind the fiscal stimulus. Because of falling wealth levels and rising unemployment, household and business demand for goods and services is falling. Instead of spending money as quickly as they once did, households save more, either keeping more currency at home or maintaining larger bank balances. In normal times, any money deposited in banks is lent out (mostly) to other

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com2tag:blogger.com,1999:blog-5397234786650431770.post-57134508370627043012009-01-09T16:42:00.003-05:002009-01-09T16:50:11.352-05:00

In economics there is a theory that can help a policy maker determine the most efficient, or most effective, policy to solve a particular problem. The theory is known as the theory of the second-best. Without going into the details (you can read more about the theory here) it says that the best way to correct for an economic problem is to choose a policy that will attack the problem in the most

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com0tag:blogger.com,1999:blog-5397234786650431770.post-1738873991154504252009-01-08T07:56:00.002-05:002009-01-08T08:23:28.581-05:00

A WSJ article today titled, Steel's Buy America Ploy, discusses a simple method a US industry can use to get government support to sustain it against its competition without asking for a handout. By asking for Buy America clauses in the expected-to-be-gigantic infrastructure spending plan, the steel industry and other US materials supply companies will receive protection against foreign

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com7tag:blogger.com,1999:blog-5397234786650431770.post-6809126282199022182009-01-07T08:29:00.002-05:002009-01-07T09:14:05.038-05:00

In "Boost Private Investment to Boost the Economy," Hal Varian provides an excellent, succinct description in today's WSJ of the basic problems we face in the economy today. He starts by saying,These days it seems like it is our patriotic duty to consume more. And if we don't choose to spend more money ourselves, the government will do it for us. But wait a minute. Isn't it excessive spending

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com0tag:blogger.com,1999:blog-5397234786650431770.post-48104685121665532042008-10-23T07:35:00.002-05:002008-10-23T07:44:24.694-05:00

Governments around the world moved quickly this month to shore up their economies by announcing major rescue plans for their banks. The intention by central banks everywhere is to restore confidence in the financial sector by guaranteeing a source of liquidity. Depositors will know that the protected banks will not be allowed to fail. Although these actions will keep the major banks solvent,

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com6tag:blogger.com,1999:blog-5397234786650431770.post-46268182279617675302008-09-27T15:40:00.004-05:002008-09-28T01:18:59.376-05:00

The Southeast is experiencing a temporary gas shortage due to last week's hurricane in the Gulf states. The effect has been long lines at the pumps, gas stations running out of gas, and a huge amount of anxiety for the residents of Georgia, Tennesee and the Carolinas.Twitter is a-twitter with information about gasoline availabilities in the Atlanta area with messages like these:"BP on Roswell

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com2tag:blogger.com,1999:blog-5397234786650431770.post-55973167657036190772008-09-05T08:33:00.002-05:002008-09-05T08:36:18.685-05:00

Here's an informative article in today's Wall Street Journal about the trade-offs between bilateral free trade areas and how they may affect the multilateral discussions in the Doha round of the WTO.

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com0tag:blogger.com,1999:blog-5397234786650431770.post-12920965169758763302008-08-04T15:11:00.003-05:002008-08-09T10:11:08.206-05:00

The failure of the Doha round talks last week is one sign among many that the conventional reciprocal concession approach to trade liberalization is becoming ineffectual. With so many issues on the agenda and so many countries involved, it may now be impossible to reach any meaningful agreement to substantially reduce trade barriers. Perhaps the time is ripe for a new approach.If the American

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com3tag:blogger.com,1999:blog-5397234786650431770.post-46114274881671898932008-07-08T09:39:00.003-05:002008-07-10T20:10:01.008-05:00

People love to watch a battle between fierce competitors and root for their side to win. To the victor goes the spoils. Sport is the modern equivalent of warfare, wherein battles can be waged every day to the delight of the competitors and the audiences. I suspect our desire for the spectacle is something that’s part of our evolutionary heritage; something so rooted within us that we cannot

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com2tag:blogger.com,1999:blog-5397234786650431770.post-62168201887178261272008-06-25T19:30:00.003-05:002008-06-25T22:25:55.118-05:00

Popular opinion is clearly rising up against the idea that free trade is a good thing. For an account of all of the problems associated with free trade, and none of the benefits, see David Sirota's piece in the Huffington Post. This is a good example of how rhetoric is used to raise fears. Notice the language used in this article to describe trade agreements: Tearing down tariffs and

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com3tag:blogger.com,1999:blog-5397234786650431770.post-88325698904201037372008-05-20T15:54:00.002-05:002008-05-20T16:48:01.067-05:00

It is business as usual in the US Congress. For years the US has preached to developing countries around the world the benefits of free and open markets, unfettered by government taxes and regulations. However, the US continues to practice distorted trade replete with government subsidization in the area of agriculture. Although the US tells other countries in the Doha trade liberalization

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com7tag:blogger.com,1999:blog-5397234786650431770.post-50823991883676154002008-05-14T08:17:00.003-05:002008-05-14T10:39:38.720-05:00

Robert Samuelson has an article today noting that the presidential candidates say things that will be virtually impossible to implement. He writes,Candidates make alluring promises (to "fix the economy," "defeat special interests" or "achieve energy independence") and offer freebies to voters (more tax cuts, health care, college aid). ... There's a vast gap between the country's problems and the

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com2tag:blogger.com,1999:blog-5397234786650431770.post-89272605238209498532008-03-15T22:31:00.001-05:002008-03-19T18:20:35.374-05:00

The current dispute in the Democratic party over what to do about the delegations from Michigan and Florida is an excellent case study demonstrating that choice on the basis of fairness is unsound.The problem arose when the Democratic parties of Michigan and Florida decided to violate the Democratic national committee's (DNC) rules and move their primaries forward to January. Under the rules only

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com3tag:blogger.com,1999:blog-5397234786650431770.post-42484698907487724002008-02-14T18:33:00.002-05:002008-02-14T19:35:00.409-05:00

If one were to pick out a country in the world right now where economic conditions cannot get any worse, that country would have to be Zimbabwe. Every time I see a story about the country, I am overwhelmed. I can't say I have ever heard of a country failing as miserably as Zimbabwe is now. And still it's sad that such a terrible calamity doesn't get more press in the Western world. Here's

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com5tag:blogger.com,1999:blog-5397234786650431770.post-31919149973117247022008-02-07T17:39:00.000-05:002008-02-07T17:50:06.910-05:00

There was an article in the WSJ yesterday by David Ranson about the presidential candidates' stated positions on trade, both Democrat and Republican. It is worth a look. He concludes that McCain seems most consistently free trade oriented. However, one comment McCain made in a recent debate was a little troubling; namely pointing out that Romney's work at Bain & Assoc. resulted in lost jobs.

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com4tag:blogger.com,1999:blog-5397234786650431770.post-47165793369424054082008-01-17T10:26:00.000-05:002008-02-11T10:00:03.834-05:00

From campaign financing by special interest groups, to rising government budget deficits, to the mishandling of the Katrina disaster and the war in Iraq, to the utter distrust for anything politicians say, I think it is more than clear to everyone that the American populace is increasingly fed up with the antics in Washington. So a call for change is extremely appealing.So on the Democratic

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com2tag:blogger.com,1999:blog-5397234786650431770.post-56124606010811708032008-01-15T08:27:00.001-05:002008-01-15T09:51:06.312-05:00

John McCain and Mitt Romney have both been campaigning in Michigan this week for today's presidential primary. It is interesting to hear what they say about the economic situation in Michigan which has one of the highest unemployment rates in the country at 7.5%. The discussion highlights the enormous pressure politicians face to say what people want to hear.John McCain: (Quoted from this

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com1tag:blogger.com,1999:blog-5397234786650431770.post-8144174184236549492007-12-21T15:22:00.000-05:002007-12-29T11:34:31.736-05:00

I was browsing through the candidates websites today to learn what they have to say about trade. Today here's a few quotes and comments about Mike Huckabee's position on trade.First he says the following:I believe in free trade, but it has to be fair trade. We are losing jobs because of an unlevel, unfair trading arena that has to be fixed. Behind the statistics, there are real families and real

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com10tag:blogger.com,1999:blog-5397234786650431770.post-66821046149560885272007-10-30T07:20:00.000-05:002007-10-30T07:38:42.029-05:00

An issue often raised is that some countries, like China, may have more lenient environmental and labor regulations than other countries. That could mean lower overall costs which could give them an advantage in international competition. Here's a couple of thoughts.1) We could think of government regulations like actions by a coach to get its team prepared for competition. Some coaches may

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com3tag:blogger.com,1999:blog-5397234786650431770.post-82118851901940104132007-10-09T15:43:00.001-05:002007-10-09T15:53:07.531-05:00

Skeptics of trade liberalization often argue that the current international trading system is unfair. It is said: workers in developing countries are paid abysmally low wages and must endure dangerous working conditions; profit seeking corporations seek out production locations with lenient environmental regulations contributing to global warming and unsustainable development; and firms produce

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com10tag:blogger.com,1999:blog-5397234786650431770.post-14918940588825463412007-10-03T06:33:00.000-05:002007-10-03T06:34:30.669-05:00

In the Ricardian model, countries are assumed to differ only in their productive capacities. It was in this model that David Ricardo first formally demonstrated the principle of comparative advantage. When defined in terms of productivity differences, comparative advantage is regularly confused with a simpler concept that economists call absolute advantage. It is worth taking a few moments to

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com32tag:blogger.com,1999:blog-5397234786650431770.post-55646218168871431522007-09-14T09:20:00.000-05:002007-09-14T11:45:33.744-05:00

One thing I'll do with this blog is to periodically provide information that I present to students in my classes. One thing we looked at this week was the US Tariff Schedule. The whole schedule is available from the US International Trade Commission's website here. For teachers and students, a look through the US tariff schedule offers a quick illustration of several important features of

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com1tag:blogger.com,1999:blog-5397234786650431770.post-70639233332587482012007-07-18T10:21:00.000-05:002007-07-18T12:09:00.262-05:00

The Washington Post had a report on Sunday about the economic costs of climate change. It highlights several important points worth emphasizing. 1) Controlling climate change will be costly. The costs will have to include higher energy prices for traditional carbon based fuels. Tax increases are being proposed to help finance research into alternatives and to reduce consumption. This will

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com1tag:blogger.com,1999:blog-5397234786650431770.post-79359600209517606662007-05-15T21:32:00.000-05:002007-05-16T08:14:40.183-05:00

Alan Blinder , in an interview with Marketplace, suggests the following to deal with increased competition from China and with globalization more generally:First, I would say don't succumb to the allure of protectionism. It doesn't work, and it certainly won't work for electronic trade. I mean, how can we stop electrons? Secondly, as I was saying before, we just have to do a better job with the

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com7tag:blogger.com,1999:blog-5397234786650431770.post-85847146340191310472007-04-19T06:54:00.000-05:002007-04-19T17:04:58.622-05:00

In an interview with Marketplace last week, Alan Blinder talks about the enormous loss of jobs that will arise in coming years because of competition with China, India and the rest of the world. Some jobs will be lost because imported goods will arrive at lower prices; others will be lost as production activities are offshored.At the same time as jobs are lost, millions more will be created. This

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com7tag:blogger.com,1999:blog-5397234786650431770.post-24005217660183408272007-04-13T13:43:00.000-05:002007-04-13T15:34:56.672-05:00

Alan Blinder, in a radio interview on NPR a few days ago, warned that competition from China and India would be like a tsunami on American shores. That competition threatens jobs, either because of a flood of imported goods, or from the backwash of jobs lost to offshore entities. The US response to a competitive tsunami, a tsunami I think is almost inevitable, will greatly influence future US

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com3tag:blogger.com,1999:blog-5397234786650431770.post-29033202292882870122007-04-12T12:27:00.001-05:002007-06-04T09:06:37.413-05:00

Marketplace did a story about offshoring yesterday with Alan Blinder of Princeton. Here's the introduction:KAI RYSSDAL: Citigroup confirmed today it's getting rid of 17,000 jobs.That's about 5 percent of the workforce at the world's biggest financialservices company. Another 9,500 jobs are moving to quote "lower-cost locations"worldwide. Word on the street is a good number of them will land in

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com1tag:blogger.com,1999:blog-5397234786650431770.post-41955877393719852242007-04-05T07:05:00.000-05:002007-04-05T08:37:57.548-05:00

Q. I recently read an editorial from the New York Times that was written in 2004 by Charles Schumer (senior senator from New York ) and Paul Craig Roberts (assistant secretary of the Treasury for economic policy in the Reagan administration). In it they argued that the case for free trade which is founded on the principle of comparative advantage is no longer valid since one of the assumptions

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com2tag:blogger.com,1999:blog-5397234786650431770.post-47042205855101058942007-03-22T15:53:00.000-05:002007-03-22T16:14:57.724-05:00

Q. On the issue of harmonious trading, the WTO has been tasked as the guardian of free trade and to promote and settle trade disputes in a fair manner. Yet there are many who oppose the WTO for being too powerful and it can compel sovereign states to change laws and regulations by declaring these to be in violation of free trade rules, it is run by the rich for the rich and does not give

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com2tag:blogger.com,1999:blog-5397234786650431770.post-47928468979262440172007-03-19T20:54:00.000-05:002007-03-19T20:56:35.294-05:00

Q2. There are some nations who feel that free trade is not fair trade. What are your views on this?A2. I think free trade is more fair than any proposed alternative. The problem is that free trade means more international competition for most firms which in turn will result in successes for some businesses and failures for others. Those that fail will lead to hardships for the workers, management

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com4tag:blogger.com,1999:blog-5397234786650431770.post-72410625843020514902007-03-19T20:52:00.000-05:002007-03-19T20:54:53.927-05:00

I received an email with a series of questions about trade. I will answer some of them in a series of posts. Here's the first.Q. Could you explain what are the benefits of trade blocs? On the other hand, since trade blocs give preferential treatment to its member countries, does this inherently violate the principles of free trading or is this disguised protectionism?A. Trade blocs and unions

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com2tag:blogger.com,1999:blog-5397234786650431770.post-76662395411327746402007-03-15T18:19:00.000-05:002007-03-15T18:47:14.502-05:00

March Madness started today in the US as 65 college basketball teams vie for the National Championship in a single elimination tournament. Many Americans participate in office pools to see who can guess the most winners in the 63 games that will be played during the next few weeks. I put an entry in the Facebook pool for a chance to win $25,000 (a very small minuscule chance!!) When I looked

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com0tag:blogger.com,1999:blog-5397234786650431770.post-11969947345913477322007-03-09T17:06:00.000-05:002007-03-15T19:19:07.398-05:00

This week the US formally raised objections at the WTO to the high levels of protection offered to Indian wine and spirits manufacturers. This follows a similar complaint lodged by the EU last November."India's basic import duties on wine and spirits — at 100 percent and 150percent, respectively — are within WTO limits, but federal surcharges and state-level taxes take the tariff protection much

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com1tag:blogger.com,1999:blog-5397234786650431770.post-36116228188623173542007-02-26T20:34:00.000-05:002007-02-26T20:38:23.157-05:00

Marketplace did a story today with John Mackey, the founder of Whole Foods Market. It is a nice account of entrepenuership in a competitive market.

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com0tag:blogger.com,1999:blog-5397234786650431770.post-47700474201472318372007-02-25T11:31:00.000-05:002007-03-22T16:19:18.440-05:00

It is generally accepted that competition encourages innovation. Many assume that innovation comes with expenditures on R&D. This makes sense - if a company directs some of its people to think up new ideas, it is more likely new ideas will arise. However, I have always suspected that many innovations come about in unexpected and unusual ways, often not with directed effort. Here's a true story of

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com1tag:blogger.com,1999:blog-5397234786650431770.post-70153454760191190472007-02-24T21:05:00.000-05:002007-05-08T09:40:35.006-05:00

By reading the popular press one might form the impression that the WTO has one set of trade rules for all countries. The truth is there is no common set of WTO trade rules. Instead each country has made a set of promises, or commitments, to reduce trade barriers from its earlier levels. In the area of tariffs on commodities, each country has committed itself to a maximum tariff rate - called a

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com1tag:blogger.com,1999:blog-5397234786650431770.post-58839701887048198812007-02-23T11:57:00.000-05:002007-02-23T13:10:27.962-05:00

Another way to see the turnover, or churning, that takes place in an economy is to consider business startups and closures. In the US in 2005 there were about 672,000 new businesses (with employees) created while about 545,000 businesses shut their doors. The total number of businesses in the US with employees are about 5.8 million. (only 17,000 businesses have more than 500 employees) Thus,

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com0tag:blogger.com,1999:blog-5397234786650431770.post-38428611444924805782007-02-23T06:39:00.000-05:002007-06-04T09:09:30.016-05:00

Freer trade and globalization will surely mean firms will face more competition. Some of these firms will lose out in competition to others and be forced to layoff workers or close their doors. On the business pages of newspapers it is common to see reports of this or that company laying off 50 or 500 or 5000 workers. (CLICK HERE to see the latest news stories on layoffs. ) The more these layoffs

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com0tag:blogger.com,1999:blog-5397234786650431770.post-44614787798307098452007-02-22T17:44:00.000-05:002007-02-25T14:22:03.074-05:00

Here's two op-eds expressing increasing wariness about free trade with some suggested solutions.Matching Free Trade with Taxes by Sebastian MallabyCan Free Trade be a Fair Deal? by Harold Meyerson(Thanks to Jeff Hay for finding these.)

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com0tag:blogger.com,1999:blog-5397234786650431770.post-23088434726295867912007-02-22T12:23:00.000-05:002007-02-22T13:49:26.054-05:00

The logic of free trade is little more than the extension of logic of the division of labor to an international level. Adam Smith discussed the productivity improvements that can arise by dividing labor into distinct tasks when he wrote about the pin factory. This example may not resonate very well with people today, since most know very little about manufacturing pins. The same idea can be

Steve Suranovichttp://www.blogger.com/profile/01605356183924981110noreply@blogger.com1