No Apology Appropriate, But Some Education in Economics Would Be a Good Idea

China demands apology from Cafferty

CNN should not apologize to a foreign state, but they ought to be embarrassed at having commentators who are as deeply ignorant of economics and of international trade accounting and finance as Jack Cafferty and Lou Dobbs.

FOLLOWUP NOTE: The nastiness of some of the comments that this short post generated tells us at least two important things: 1. Nationalism is ugly and dangerous, regardless of what flavor it is, whether “American,” “Chinese,” or something else; 2. People who live with a state-controlled media may have difficulty in understanding that one ignorant person saying one ignorant thing on one television network show does not mean that all Americans are ignorant or that the ignorant remark reflects the views of the American “nation” or of the American government.

FURTHER UPDATE: Upon further reflection (and after reading the comment by Liu), I wish to clarify my posting. I meant that CNN should not apologize to a state, either the US government or any other, for offensive or ignorant remarks by one of its commentators. But I do think that Mr. Cafferty should apologize for characterizing “China” as a “bunch of goons and thugs.” I gather that he did apologize for that terrible mischaracterization. It was nasty, ignorant, and inappropriate. In addition, his understanding of the nature of trade is deficient, to say the least.

My interview in Il Giornale about Needed Italian Post-Election Reforms

Tom Palmer: “Meno Stato più impresa”

An Informed Analysis from Two Serious Economists

Blame Federal Gov’t, Not The Fed, For Subprime Mortgage Problems

Lessons from Iran

Most of the lessons from Iran are negative in character, but that’s no reason to refuse to learn from good policies anywhere. As transplant nephrologist Benjamin Hippen (whom I met some years ago at a conference on children’s rights) shows, incentives matter, regardless of where or among whom. In “Organ Sales and Moral Travails: Lessons from the Living Kidney Vendor Program in Iran,” he shows that allowing voluntary exchanges for kidneys increases the numbers of transplantable kidneys, cuts the waiting lists, and diminishes the numbers who die from end-stage renal disease.

Bear Stearns Bailout

Russ Roberts on the NPR: “Does Bear Stearns Bailout Set a Bad Precedent?”

Capitalism and Freedom in Persian

سرمایه داری و آزادی

Call for Papers

The Istituto Bruno Leoni has issued a call for papers on “Competition, Regulation and Anti-Trust” for the Fifth Mises Seminar, which will be held in Sestri Levante (Italy), October 3-5, 2008. It is open to authors under 35 years of age.

Cato Policy Report: China, Gold, and More

Property in One's Labor

While doing a little research to assist my Russian colleagues with the Cato.ru essay contest and summer school, both of which focus on property and freedom, I found again this wonderful statement from Adam Smith, offered in defense of freedom to labor against licensing and other restrictions on free exchange:

The property which every man has in his own labour, as it is the original foundation of all other property, so it is the most sacred and inviolable. The patrimony of a poor man lies in the strength and dexterity of his hands; and to hinder him from employing this strength and dexterity in what manner he thinks proper without injury to his neighbour, is a plain violation of this most sacred property. It is a manifest encroachment upon the just liberty both of the workman, and of those who might be disposed to employ him. As it hinders the one from working at what he thinks proper, so it hinders the aothersa from employing whom they think proper. To judge whether he is fit to be employed, may surely be trusted to the discretion of the employers whose interest it so much concerns. The affected anxiety of the law–giver lest they should employ an improper person, is evidently as impertinent as it is oppressive.

*Adam Smith, Glasgow Edition of the Works and Correspondence Vol. 2a An Inquiry Into the Nature and Causes of the Wealth of Nations, Vol. 1, CHAPTER X: Of Wages and Profit in the different Employments of Labour and Stock (paragraph 591) (I am so grateful to the Liberty Fund for making such works available in beautiful and inexpensive print editions and at zero price in easily accessible forms online.)

Bettering Lives Through Free Enterprise

My colleagues have done amazing work in the Arab world with Misbah al Hurriyya (the “Lamp of Liberty”) and now they have added online videos from their work with Al Jazeera television on free enterprise in the Arab world.

Wasted Aid

“Foreign aid is flowing in in large amounts, but it’s not reaching the people,” by Thompson Ayodele, The Sowetan, March 5, 2008

Thompson is a great fighter for liberty whom I met in Nairobi at the Mont Pelerin Society meeting in 2006 and then last year at the African Resource Bank meeting in Dar Es Salaam. He is executive director of the Initiative for Public Policy Analysis in Nigeria and a regular contributor to AfricanLiberty.org.

Trade Creates Prosperity

From the Wall Street Journal: “Ohio Needs More Foreign Trade,” by Daniel T. Griswold

Diminished Expectations for Politics

Tyler Cowen in today’s New York Times, “It’s an Election, Not a Revolution”

Rather than being cynics, we should be realists. Democracy is reasonably good at some things: pushing scoundrels out of office, checking their worst excesses by requiring openness, and simply giving large numbers of people the feeling of having a voice. Democracy is not nearly as good at others: holding politicians accountable for their economic promises or translating the preferences of intellectuals into public policy.

THAT might sound pessimistic, but it’s not. Many Americans will be living longer, finding new sources of learning and recreation, creating more rewarding jobs, striking up new loves and friendships, and, yes, earning more money. Just don’t expect most of these gains to come out of the voting booth or, for that matter, Washington.

And if you’re still worrying about how to vote, I have two pieces of advice. First, spend your time studying foreign policy, where the president has more direct power, and the choice of a candidate makes a much bigger difference. Second, stop worrying and get back to work.

A Petition of the Candlemakers

2008: EU poised to open anti-dumping probe of Chinese candles

1845: “A Petition (in English)” “Pétition des fabricants de chandelles (French)”

Not Raising Pigs

Making the Rounds on the Internet:

The Rt Hon David Miliband MP
Secretary of State,
Department for Environment, Food and Rural Affairs (DEFRA),
Nobel House
17 Smith Square
London SW1P 3JR

Nigel Johnson-Hill

Here it is in French.

Hat Tip to Emmanuel Martin.

Cudjoe v. Clooney

My friend and colleague Franklin Cudjoe, the leader of the IMANI think tank in Ghana and editor of the joint IMANI/Cato project AfricanLiberty.org, takes on the appointment of George Clooney as a “peace ambassador” in Africa in a debate with a “Friend of the Earth.” The debate is in the last quarter of this BBC segment.

UPDATE: It turns out that the link expired and I cannot now find the item on the BBC website. Franklin made some very good points. (I have an audio file made from a microphone held up to the radio, but the quality is poor and I don’t know how to post such a file. I am hoping to help Franklin and his colleagues get some better recording equipment so that they can post such items.)

Paper on Globalization and Governance

Coming Soon to an Academic Portuguese-Language
Bookstore Near You!

I gave a paper at a conference on governance at the University of Aveiro, Portugal in 2006 and it’s about to appear in the book that resulted from the conference. (I also debated the leader of the Left Bloc in the Portuguese parliament and did, I think, rather well, as he seemed not to understand the concept of “evidence.”)

Here’s the paper in English.

The Debate:

Thanks to André Azevedo Alves for the invitation, the book, and the whole experience!

The Mind of the Market: Compassionate Apes, Competitive Humans, and Other Tales from Evolutionary Economics

Niskanen on the "Stimulus"

William Niskanen, “Rebates will run up the deficit in a futile attempt at stabilization,” from USA Today.

Capitalism, Free Trade, and Democracy

The quotes in this Washington Post story (“Shanghai’s Middle Class Launches Quiet, Meticulous Revolt”) tell a lot:

“They can’t arrest everybody,” said Yao, a 58-year-old protester who asked that his full name not be used because he is a manager at a state-owned enterprise.

“We haven’t done anything wrong,” said Wang Guowei, 51, a manager in a Chinese-Japanese plastics venture whose family lives near the planned extension. “We always follow the Chinese constitution, we never violate the law. And in our many contacts with the police, they say we are within the law.”

Good Thing We Have a Central Bank to Fix Things!

Was the Fed Tricked?

It seems that the Fed may have moved into emergency save-the-day mode…..not knowing that the market losses were triggered by a major sell-off by a French bank scrabbling to minimize losses due to the actions of an inadequately supervised “rogue trader.”

Steele on Shallowness Masquerading as Economics

A Note on the “Mises” Institute

Boudreaux on Globalization!!! Its Grreeaat!

I just got Don Boudreaux’s book Globalization. It’s a good read and full of evidence and clear-headed analysis.

The Case for Property Rights in Fish

Today’s New York Times: Europe Takes Africa’s Fish, and Boatloads of Migrants Follow

Fencing the Oceans: A Rights-Based Approach to Privatizing Fisheries

No Exit: Framing the Problem of Justice

My essay on the “exit closure” and the social contractarian theory of John Rawls just came out in a book edited by Hardy Bouillon and Hartmut Kliemt, Ordered Anarchy: Jasay and His Surroundings (Aldershot: Ashgate Publishing, 2007).

The book has some very interesting chapters, which I’m looking forward to reading. (My chapter, “No Exit: Framing the Problem of Justice,” should be available soon on this humble website as a downloadable PDF.

Back to ..... Absurd Commentaries

I just landed a while ago and turned on my Kindle, turned on the wireless access, and read this example of confusion while waiting in the very long line for immigration: “In Chinese Factories, Lost Fingers and Low Pay.” (I was recently in Hubei, Guangzhou, and Shenzhen.) See if you can count the inanities.

A few hints:

“His brother, Xu Wenjie, 18, said the two young men left their small village in impoverished Guizhou Province four months ago and traveled more than 500 miles to find work at Huanya.” Maybe they were mistaken, but people rarely repeatedly and systematically act to worsen their situations. There is no mention in the article of the conditions in Guizhou Province, which might help to provide context for the article.

“Here in the Pearl River Delta region near Hong Kong, for example, factory workers lose or break about 40,000 fingers on the job every year, according to a study published a few years ago by the Shanghai Academy of Social Sciences.” How many people work in the Pearl River Delta region near Hong Kong, and how does that compare to how many fingers were lost or broken in the past, or among similarly large groups of people elsewhere? How many were broken and how many lost? Why bother checking or making such comparisons?

“As long as life in the cities promises more money than in rural areas, they will brave the harsh conditions in factories in this and other Chinese cities. And as long as China outlaws independent unions and proves unable to enforce its own labor rules, there is little hope for change.” Outlawing labor unions is indeed a terrible thing to do. It should be changed. But as “life in the cities promises more money” and wages are rapidly rising, there is a LOT of hope for change. It’s changing as we speak.

“At the same time, rising food, energy and raw material costs in China — as well as a shortage of labor in the biggest southern manufacturing zones — are hampering factory owners’ ability to make a profit.” A shortage of labor means that employers have to raise wages (and wages include money and working conditions, both of which are improving) to attract workers. A shortage of labor is not a bad thing for laborers. (Duh.)

“’This is a problem that has been difficult to solve,’ Liu Kaiming, the director of the Institute on Contemporary Observation, which aids migrant workers in nearby Shenzhen, said of sweatshop labor. ‘China has too many factories. The workers’ bargaining position is weak and the government’s regulation is slack.’” How does a large number of factories competing for workers make their “bargaining position weak”? That’s quite a novel interpretation of labor economics.

It’s a shame to come back and find the first thing I read a case of China-bashing based on simple ignorance and laziness. China has its problems, but falling wages and worsening labor conditions are definitely not among them.

Economic Freedom of the World Report in Chinese

Thanks to the good work of friends in China, the Economic Freedom of the World Report produced by the Fraser Institute (and published in the US by the Cato Institute) is now available in Chinese. (The link is to a summary; the full version will come out separately. A more elaborate version of the 2007 edition is also underway.) The Economic Freedom of the World Report is also a feature, either in full text version or in interactive maps, through Cato’s projects in Arabic, Spanish, Portuguese, and French, and the other projects will have it online soon. The introduction of data and rigorous analysis is an important element in promoting the understanding of freedom.)

A Little Good News

“Economics in many lessons: A better brew for Rwanda,” by Karol and Don Boudreaux

Zimbabwe notoriously excepted, the trend in much of Africa is positive. They’ve tried virtually everything else…..it’s time for something that works: “the obvious and simple system of natural liberty.”

Ravaging Africa

NGOS IN AFRICA: The new imperialists

Andrew Mwenda on Foreign Aid

The Ugandan journalist Andrew Mwenda tells it like it is: “Andrew Mwenda: Let’s take a new look at African aid.”

I met Andrew in Nairobi earlier this year; he’s a great spokesman for classical liberalism and an inspiring person.

A Cool Breath of Reason

Bjorn Lomborg, author of Cool It: The Skeptical Enviromentalists’s Guide to Global Warming

Bjorn Lomborg has a great essay in today’s Washington Post, “Chill out: Stop fighting over global warming — here’s the smart way to attack it.”

Neatly Skewered

The soi disant deep thinker Naomi Klein has her deep thoughts brought up for a little sunlight by Tyler Cowen, “Shock Jock.”

(I read her book No Logo years ago. Lots of elegant sentences, but they don’t add up to a coherent picture of how anything works.)

A Thoughtful Defense of Apple and Freedom of Contract

Thomas Hazlett in FT.com and MSNBC, “How the ‘walled garden’ promotes innovation.”

Apple could have offered its device as an “open” platform, but instead chose (as with iTunes, iPods and Apple computers) to control how it builds, and how buyers use, its product. It aims for competitive superiority. Quashing its model bops the innovator on the head. Unbundling phones from networks is suggested as a policy fix in the US. European phones, working with different Sim cards across carriers and borders, are the model. Innovation in the European Union is said to flourish. But the iPhone came first to the US, as did the BlackBerry and advanced broadband networks using CDMA data formats. That is not surprising given that US networks are afforded wide latitude in designing their systems. Licences in the EU mandate a GSM standard. What is recommended as “open” in fact deprives customers of a most basic cellular choice: technology.

Belarussian Classical Liberal Website

Economy.by*

*In Russian and in English.

Siloviki Statism

A very useful introduction to the political economy of the new Siloviki State: “The making of a neo-KGB state.”

Monetary Economics 101

Very Small Change

Ok, kids! Write a short essay about this analysis:

Last month a new 200,000 Zimbabwe dollar note was launched, in a bid to tackle the country’s inflation, the highest in the world.

The country’s government has created a commission to find a way to control soaring living costs.

But correspondents say that as long as Zimbabwe has a shortage of staple foods, including maize, food shortages are likely to continue.

Avoid words and phrases such as “idiotic,” “stupid,” “printing more money won’t stop money from losing its value,” and — regarding the last sentence — “duh.”

Another Package of Insights from Tyler Cowen

I just finished Tyler Cowen’s enlightening new book, Discover Your Inner Economist. It’s a good antidote to the “isn’t economics weirdly counter-intuitive” genre, which, although often fun, doesn’t do as much to advance economic literacy as some seem to think. Discover Your Inner Economist is full of interesting ideas about such issues as self-deception, why some incentives work in certain settings, but not in others, and why wonderful restaurants may be hard to find in wealthy countries. It’s also full of lots of Tyler’s unique personality, which I happen to find interesting. (But…not everyone will be as enchanted by his informed discussions of his passions, such as tasty food, so for a few sections it may be worth taking his advice about reading books [pp. 61-66].)

Brandishing Brands

Edward Snyder of the University of Chicago Business School has a novel idea about the problem of some unscrupulous manufacturers in China cheating customers (including other manufacturers) with unsafe products: put incentives to work.

The market’s place

A Great Approach to History

My friend Steve Davies, a truly wonderful lecturer on history, gave a great talk yesterday on the nature of history at this IES Europe seminar. A precis of it can be found in the January 2007 issue of The Freeman, “A Different Story” [PDF] [HTML].

New Index of Liberalization Available (in Italian)

My friends at the Instituto Bruno Leoni have produced a new “Index of Liberalization” to measure openness to competition.

Very Cool

I’m looking forward to flying on a lighter, cheaper-to-fuel, more luxurious Boeing 787! Imagine a firm in a highly state-subsidized industry thinking like this:

“Our journey began some six years ago when we knew we were on the cusp of delivering valuable new technologies that would make an economic difference to our airline customers,” Mike Bair, vice president and general manager of the 787 program, told the crowd.

Mises, Call Your Office!

The stories keep repeating themselves, so they should come as no surprise. The world, it seems, is still governed by “cause and effect.” These New York Times articles tell the story:

“Anti-Inflation Curbs on Prices Create Havoc for Zimbabwe”

As the police and a pro-government youth militia swept into shops and factories, threatening arrest and worse unless prices were rolled back, staple foods vanished from store shelves and some merchants reported huge losses. News reports said that some shopkeepers who had refused to lower prices had been beaten by the youth militia, known as the Green Bombers for the color of their fatigues.

“Zimbabwe Bans Bulk Buying as Shops Run Empty”

Mugabe denies charges he has presided over the country’s worst economic crisis since independence from Britain in 1980 and instead says the West has sabotaged the economy to punish him for seizing white-owned commercial farms for blacks.

Note the use of “presided over” in place of “caused.”

(The economist Ludwig von Mises had important things to say on the dynamics of interventionism, much of which is being demonstrated again in the agony of the Zimbabweans.)

The Bottom Billion

This review by Niall Ferguson (combined with my knowledge of other work by Collier that I’ve read) spurred me to order Paul Collier’s new book, The Bottom Billion: Why the Poorest Countries Are Failing and What Can Be Done About It. The proposal for ten-year military occupations and administration sounds remarkably unappealing and even foolish, but Collier is a very smart fellow and I’m looking forward to his insights into the sources of dysfunctionality in poor nations.

I met Paul Collier, formerly research director of the Development Research Group at the World Bank and now professor of economics at Oxford University, at a conference in Athens in 2006, after which I got and read some of his articles on ethnic diversity and civil conflict, the effect of monopolizable resource rents on political and economic development, and other topics. If you’re interested in African issues (and issues of legal, political, and economic development generally), you should know Collier’s work.

An Intelligent Analysis

of Patents for Software, by my colleague Tim Lee, in today’s New York Times: “A Patent Lie.”

But don’t software companies need patent protection? In fact, companies, especially those that are focused on innovation, don’t: software is already protected by copyright law, and there’s no reason any industry needs both types of protection. The rules of copyright are simpler and protection is available to everyone at very low cost. In contrast, the patent system is cumbersome and expensive. Applying for patents and conducting patent searches can cost tens of thousands of dollars. That is not a huge burden for large companies like Microsoft, but it can be a serious burden for the small start-up firms that produce some of the most important software innovations.

No one should blame software companies for patenting their work, since if they don’t, they can be effectively barred from enjoying the fruits of their own labor. But there’s something dysfunctional about a system in which people patent in order to protect themselves from the patents of others.

A Chinese Model?

Middle Kingdom, Middle Path?

James Mann has an interesting article in today’s Washington Post, “A Shining Model of Wealth Without Liberty,” which asks whether China presents a new model political/economic system. China raises issues that are not applicable to other models, such as Venezuela, Russia, and (in their day) Iraq and Saudi Arabia, which accumulate wealth through exploitation of rent-producing resources (oil), rather than through production and exchange facilitated by well defined and legally secure rights and a rule-governed legal system.

The topic certainly deserves a lot more study and thought. How much prosperity are the Chinese sacrificing by maintaining such controls, or is the enormous increase in prosperity (enjoyed very, very unevenly throughout the country, as are measures of the rule of law and marketization) sufficient in comparison to what preceded it to generate sufficient legitimacy for the system to persist indefinitely? Or is the system itself responsible for a net increase in prosperity over what a more democratic regime might have produced, given that it might well have proven to be unstable, chaotic, and prey to potentially even worse forms of tyranny? These are hard questions, but they urgently need to be asked.

A Stimulating Source of Thought

My old friend Bertrand Lemennicier, who always takes great pleasure in provoking thought, has a quite interesting website, mainly in French. (It also hosts an elegant edition of my essay “La Mondialisation ? C’est magnifique!,” translated by Philippe Chamy.)

How It's Done

Theft on a truly astounding scale.

Aggression against Estonia, a formerly occupied but now independent nation.

Politically motivated trade embargoes against formerly occupied but now independent nations, Poland, Georgia, and Moldova (the latter two still partly occupied).

An Occasion for Thought (at least a little...)

Now that Paul Wolfowitz has announced his resignation from the World Bank, so pundits are sharing their views on the World Bank, Wolfowitz, Neo-Cons, and more. Sebastian Mallaby of the Washington Post has one such essay, “Finishing What Wolfowitz Started,” which is generally more thought-provoking than the others. Maybe we should just finish the World Bank, which has had very little positive impact on the world and a great deal of negative impact.

For another view, see William Easterly’s essay, “Does He Hear the World’s Poor? Don’t Bank on It,” which I have arranged to publish in Russian, Arabic, Chinese, Spanish, and other languages.

Cool Map of Economic Freedom of the World

My colleagues Fadi and Ghaleb at Misbah al Hurriyya (the Lamp of Liberty) have produced a really cool new global map based on the Economic Freedom of the World Report, produced by the Fraser Institute and co-published in the USA by the Cato Institute. The map (click here and then click on the spinning globe in the upper left corner — then pick a continent and a country and the data appear) supplements the full Arabic text of the report (on the same page — scroll down), which provides all text, charts and tables, the statement of methodology, and an essay on the failures of foreign aid by William Easterly.

The UN Commission on UN-Sustainable UN-Development

I’ll Develop You, Alright….Right in the Face!

After destroying economic, social, and political life in Zimbabwe, the government of that ruined country has been chosen to chair the United Nations Commission on Sustainable Development. The downward spiral toward death initiated by Robert Mugabe simply is not sustainable. Starvation is an unsustainable form of undevelopment.

Bryan Caplan on Democracy, Majorities, Minorities, and Stupid Policies

My economist friend Bryan Caplan has an interesting essay, “Special-Interest Secret,” in today’s Wall Street Journal. He faults majority ignorance at least as much as minority greed (and the difference in transaction costs between large and small groups) for the persistence of bad policies:

In a monarchy, no one likes to blame the king for bad decisions. So instead of blaming the king himself, critics point their fingers at his wicked, incompetent and corrupt advisers. While this is a good way to keep your head, it is hard to take seriously. Kings often make bad decisions; and in any case, if his advisers are hurting the country, isn’t it the king’s fault for listening to them?

In a democracy, similarly, no one likes to blame the majority for bad decisions. So instead of blaming the majority, critics point their fingers at special interests. But this too is hard to take seriously. The majority often makes bad decisions; and in any case, if special interests are hurting the country, isn’t it the majority’s fault for listening to them?

I have started his book The Myth of the Rational Voter: Why Democracies Choose Bad Policies, but have not finished it. It’s quite good and it raises lots of problems for traditional political science, including public choice economics. Although I haven’t yet finished it, I have read enough that I can in good conscience recommend it.

Globalization is Grrrreat! in Georgian

A very talented translator, Irakli Todria, as rendered my essay “Globalization is Grrrreat!” into Georgian: “Globalizacia magarrria!”

伟全球化就是好！

“Globalization is Grrrreat!” is now available in Chinese: 全球化就是好！

World Banking

William Easterly, author of some really fine books on development economics, offers his insightful take on the travails of Paul Wolfowitz at the World Bank in today’s Washington Post: “Does He Hear the World’s Poor? Don’t Bank on It.”

Common Sense on Gun Control

Professor James Wilson has an article in the Los Angeles Times that helps to make sense of responses to the horror that was perpetrated at Virginia Tech: “Gun control isn’t the answer: Why one reaction to Virginia Tech shouldn’t be tightening firearm laws.”