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July 13, 2007

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paine

dani

nice to see a wage eye view
not
hayekian"enterpriser searchers and seekers "
but
u look from south to north here
part i suppose of your
discount
of north wagers benes
vs south wagers benes

fine
your option
i might in my heart of hearts share it

but ....
someone needs to speak for norhern labor ...right ??

why should they take the beating
especially when their capital owning brethern
make nice profit gains
off cross border
wage and tax arbitrage

what can not continue
in this case the melt down of the bottom 2/3
of the american wage structure
won't continue

so what is to be done ???

promises
of comping the losers
can be
even at best
a gyp job too

my point

your model
relies on
the likes of
Toyota and GE
and walmart
to power the emerging markets
take off

and they will exact a terrible price
on both ends
of the working world

robertdfeinman

There are barriers in the US that are almost as effective as the international ones.

One of the most important is the state's attitude toward labor. Growth in the South for the past 40 years was driven by its willingness to discourage unionization. In addition subsidies given to new businesses meant that the citizens were paying to have firms move in. I don't see where this is any different in principle from putting in restrictive tarriffs.

Just today there was a study mentioned that showed that those states with the poorest quality of life were also those rated most "business friendly".

We have our own third world micro-economies right here in the good old USA.

Karl Smith

Great post. I am always amazed at the argument that political borders are meaningless demarcations for economic agents.

Is the divergence in income between Los Angeles and Tijuana just a giant historical accident?

Is the difference in income between the United States and Sierra Leone completely explained by endowments and transportation costs?

Borders clearly matter. We can argue about why they matter but it seems to fly in the face of overwhelming evidence to say that they are meaningless.

Murphy

Dani,

Thank you for making this distinction. The case for free movement of goods and people within the US is a no-brainer. But these states share a lot more than any two sovereign countries can ever be expected to share in any reasonable time period. Smart people like Boudreaux are so ideological about this issue that the significant difference between a boundary that separates North Carolina and Tennessee and a boundary that separates Mexico and the US just disappears before their eyes.

Dodo

Quick question: If political boundaries have transaction costs equal to 40% in tariff equivalents should a partial equilibrium analysis of formal tariffs take this into account? That is, does a 3% liberalization move from 10% to 7% or from 50% to 47%. Given that welfare losses are proportional to the square of the tariff this would seem to make a difference. What's the appropriate way to think about it?

Per Kurowski

Just a brief question about the equitable distribution within the borders of the benefits and the costs that arise from protection at the borders.

For instance are the poor Tennesseans aware of how much more they have to pay for their orange juice because of those specific duties imposed on orange concentrate imports, and that sometimes represent more than 70% ad valorem…just so that the holding costs of the orange groves in Florida are kept low until these are turned into malls at great profits? If the Tennesseans are not aware…should they be made aware?

No MA

http://delong.typepad.com/sdj/2007/07/don-boudreaux-v.html

Looks like a Dog pile. (Think you've missed the mark Dani. Defending protectionism is risky business.

Laurent GUERBY

Dan Boutreau of "Cafe Hayek" is incoherent when he portrays himself as "free trader".

Why?

He supports intellectual property, in the most extended version of it (everything under the sun is patentable, infinite copyrights, free speech losing against trademarks, etc...).

There is no free market and extraordinary protectionism if there is intellectual property.

Thats's simple.

But there's even better, he is running a blog under the name of "Hayek".

Here is what Hayek said about intellectual property:

""" Just to illustrate how great out ignorance of the optimum forms of delimitation of various rights remains - despite our confidence in the indispensability of the general institution of several property - a few remarks about one particuilar form of property may be made. [...]

The difference between these and other kinds of property rights is this: while ownership of material goods guides the user of scarce means to their most important uses, in the case of immaterial goods such as literary productions and technological inventions the ability to produce them is also limited, yet once they have come into existence, they can be indefinitely multiplied and can be made scarce only by law in order to create an inducement to produce such ideas. Yet it is not obvious that such forced scarcity is the most effective way to stimulate the human creative process. I doubt whether there exists a single great work of literature which we would not possess had the author been unable to obtain an exclusive copyright for it; it seems to me that the case for copyright must rest almost entirely on the circumstance that such exceedingly useful works as encyclopaedias, dictionaries, textbooks and other works of reference could not be produced if, once they existed, they could freely be reproduced.

Similarly, recurrent re-examinations of the problem have not demonstrated that the obtainability of patents of invention actually enhances the flow of new technical knowledge rather than leading to wasteful concentration of research on problems whose solution in the near future can be foreseen and where, in consequence of the law, anyone who hits upon a solution a moment before the next gains the right to its exclusive use for a prolonged period.

The Fatal Conceit: The Errors of Socialism, 1988 (p. 35) Friedrich von Hayek"""

He of course never answered my comments on his blog about his intellectual property.

And now he champions free trade again.

So you know what to ask him in this debate :)

paine

delong
hits a new low
the mike fink
of the econ con
keely blog boats

is anyone reading
his stuff that thinks
he's more then an MC ....

brad my boy
your 25 year
bluff will get called
some day
and
by a name big enough
you can't ignore it

No MA

There isn’t any particular reason to believe that copyrights are significantly different from most any other sort of contract one might enter into.

You purchase a book - and by so doing, implicitly agree to the fine print inside - "will not reproduce blah blah blah"... to the extent that you do, this is a breech of contract . An enforcement mechanism may indeed be necessary - but not a system of rules to specifically govern copyright protections. Apart from this sort of organic copyright protection – which is entirely consistent with a free market and Hayek’s statement above - I don’t know that I’ve ever read an endorsement or defense of IP rights on CafeHayek - can you provide a link?

Steve Waldman

I think it is important to note that many of the kinds of "protectionism" and "industrial policy" that Dani Rodrik might sometimes support are, in fact, pursued by states and localities within the United States, in competition with one-another. States frequently offer tax breaks and credits to industries they hope to nurture, and offer incentive packages to woo factories and firms in hopes that "dynamic effects" (employment, clusters, pioneer effects) will overcome the costs to taxpayers. In international politics, these would be export subsidies. In interstate politics, it is commonplace. So the idea of "free trade between the 50 states" is a bit of a counterfactual. There are no tariffs, but other trade distortions are common.

( More here: http://www.interfluidity.com/posts/1184187350.shtml )

Laurent GUERBY

No MA: "I don’t know that I’ve ever read an endorsement or defense of IP rights on CafeHayek - can you provide a link?"

It's easy to find examples via google using the "site:" trick, here is one example:

http://cafehayek.typepad.com/hayek/2005/01/underappreciate.html

"[...] Jim DeLong has this very nice discussion of this matter, in the context of intellectual property, published at Tech Central Station. [...]"

Here is the first paragraph of the "nice discussion" according to Don Boutreau :

"The current hysterical assault on industries that deal in intellectual property, primarily pharmaceuticals and entertainment, seems utterly baffling. These industries spew out extraordinary floods of worthy things: life-saving, life-enhancing drugs; breathtaking movies; music for every possible taste. And both are bitterly demonized, as if they cheat us by asking that money be paid in return for their wares. [...]"

And thanks for portraying copyright as a simple enforcement problem, it got me a real good laugh :).

What contract did I sign when I hear a song or speech on someone else radio/TV ? When I read stuff on a website including this one ? When I get a dumped newspaper or book on the ground ? What about first sale doctrine for physical objects ?

Copyright is just plain protectionism. If you open an history book for once you'll see that the biggest book pirate "emerging" nation was the USA not so long ago.

hari

Dani-
If you look a bit into history of gatt trade negotiations rounds, since 1972 (I got officially started then), you'll find -

OECD Sec introduced comparative advantage to protect western countries technology;

notion of fair play never entered into OECD jargon until we got them to recognize trade imbalance and its inherent political consequences (no added value in developing countries);

S Korea, Taiwan made tremendous advances in industrial processing and added value in sectors which OECD considered threatening (NTBs started coming into play);

NTBs are still backbone of EEC/EU protectionism today in areas such as fisheries, leather, flavours, etc (so-called health hazards);

IP rights in pharma have been rightly challenged by Indian manufacturers (with whom I've worked for transfers in Hyderabad) and US finally accepted their arguments;

In my official experience, from OECD/EU, protectionism is rightly considered a political right of the sovereign in trade negotiations;

under WTO, NTBs have not been removed nor relegated to second line of defence -they simply remain off the books in form of health and other regulations.

In sum, ACP countries have tried to overcome EU (national) health regulations by opting for TA in establishing EU standards to overcome their NTBs.

save_the_rustbelt

Don wants freer trade in everything but professors, he really likes his tenured job.

Blue collar workers, well, destroying their jobs is good for the rich.

And Don always runs out that intra-state strawman when he doesn't have enough firepower to win an argument.

save_the_rustbelt

Don wants freer trade in everything but professors, he really likes his tenured job.

Blue collar workers, well, destroying their jobs is good for the rich.

And Don always runs out that intra-state strawman when he doesn't have enough firepower to win an argument.

save_the_rustbelt

Don wants freer trade in everything but professors, he really likes his tenured job.

Blue collar workers, well, destroying their jobs is good for the rich.

And Don always runs out that intra-state strawman when he doesn't have enough firepower to win an argument.

Per Kurowski

Dani Rodrik says: "The point I made was that a poor country would have the real prospect of converging in living standards with rich countries if international economic integration were near-total (involving free labor mobility, truly integrated capital markets, and a transnational set of regulatory, legal and political institutions that underpin this integration). In the absence of these, trade liberalization does not get you there. You are in a second-best world and you need to think appropriately."

I totally agree. If development countries are invited to a nudist camp then they better make sure it is a true nudist camp and not just populated by drooling Peeping Toms. If it is not a true nudist camp then they are perfectly right in dressing up in some fig leaves at least. Alternatively they could create their own true nudist camp and invited developed countries who really believe in nudism.

paine

dani
i'm no sycophant

but ...

your update made my week

thanx !!!!!

Brad LeDong

No, the argument that poor countries are and remain poor because their governments are incompetent and corrupt is one of the absurd reductionisms of the day which I do not believe in and have written against.

Nonsense!

Those darkies are only poor because they're lazy!

And criminal!

And ungrateful -- after all we free-trade economists have done to help them!

paine

delong auto-redux

over played hand ???

then
try a notion of escape

by overplaying
his usual blowhardy
el duce
of the demecon
squadristi

by
over
the topping it

effacing ???

i doubt it

fortunately
many of us
saw the borish clown
for what he was
delong b4
this feeble
obscuring attempt

sorry bradington
there's no
escape thru
over broad
self parody

if you're
really
aware of just how
silly you are ....

then why not
stop yourself
next time
b4
you reach for
the squirt gun

paine

btw

ledong

brad's no racist

he's as fair and square as the best of us

just reckless
and insensitive
as only an establishment
meme thug can be

why he doesn't like dani's cuff some now after his over the top
claim
that a pips
some pipqueal
libertarian noodlefist
could even hit let alone
knock out
"the turkish hammer"
strikes me as the act
of a restless
self disappointed
cuff
envious --beyond control--
of a new blogster
outshining him already

DRR

Paine, you are the creepiest blog poster ever.

Peter Gallagher

Danni,

Until your last paragraph I thought you were going to conclude that even in a 'second best' world of compounding 'resitances' to international exchange, trade barriers are a costly and clumsy way to subsidize supply capacity and are not a recommended policy prescription even for competent governments.

But your last paragraph makes me wonder if I'm reading you right. I have two difficulties with it. First, I don't think you can call China's economic history since Deng a 'strategy.' My impression is that the economic impacts of de-collectivizing farming were a surprise, as were the impacts of internal migrations on industrialization and the degree to which overseas chinese investment mobilized from the mid-80s onwards.

My second doubt about this argument is concerns the claim that China's 'sequential' opening to international trade was 'best'. Isn't it possible that China could have been even more wealthy (instead of rather poor even on a PPP basis) — with fewer under-performing State enterprises and a larger tradeable services sector — if it had liberalized trade barriers earlier? I suspect the argument in favor of positive impacts from earlier liberalization is at least as attractive as the argument against.

Best

Peter

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