A Dangerous Financial Product

Dr Don Boudreaux at Cafe Hayek responds to an essay and email proposing yet another regulatory commission to protect consumers from ourselves.

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Time to end the Cuban embargo

“I challenge Mr. Bush to tear down this embargo,” said Mississippi cotton farmer John Newcomb, borrowing Ronald Reagan’s famous 1987 line to Soviet leader Mikhail Gorbachev at the Berlin Wall.

I am usually suspicious of the agriculture lobby but dropping the embargo makes a lot of sense. At this time, Fidel is pretty much rendered invalid, I doubt that ending the embargo would result in a more powerful, richer communist government. The influx of Cuban-American emigres would take care of that. Interestingly, the article points out that the US already exports more food to Cuba than any other. Cuba needs trade partners. If the US won’t let US businesses sell to Cuba, then China, Vietnam, and Venezuala will benefit from the Cuban market.

The price of cut-rate Chinese imports

So I don’t have time to explain but gosh look at this story.

Chinese diethylene glycerol (a component of anti-freeze) is finding it’s way in medicine all across the world, sometimes with the help of western firms. Next time you hear complaints about “big” drug companies, consider the cost of cutting corners.

The Paper Dragon

The editorial in the National Review today highlights all the reasons US policy should be geared towards a more protectionist stance towards China, namely, it subsidizes all aspects of its economy through state controlled banks, making it hard to determine to what degree each industry is subsidized. In the US, we subsidize corn heavily. If the EU or other countries wish to block our corn to their market, it is their right to do so. With China it isn’t so easy to tell.

The interesting part of the editorial is this:

That’s bad enough, but consumers should have bigger worries on the heels of this announcement. The Commerce Department ruling opens the door to new tariffs on everything from steel to textiles, because it reverses a decades-old policy of treating China as a non-market (Communist) economy for the purposes of assigning “countervailing duties,” which are tariffs that offset subsidized exports. Because it’s difficult to know which exports are subsidized in a Communist country, Congress has traditionally exempted non-market economies from countervailing duties, subjecting them instead to lower tariffs called “antidumping duties.” The new policy at Commerce doesn’t change China’s status from non-market to market economy. Instead, it treats China as both in order to maximize the political payoff.

Lowry and company are upset that Bush and congress want to use the rules that apply to democracies (countervailing duties) to communist, non-market China. What’s all this talk I hear about open markets in China, then? If China wants to step up to the plate with the big kids, it should be prepared for a little blowback. Chinese policy has thrived on this ambiguity for too long, seemingly open markets for deep-pocketed investors, but a good deal of governmental control over property rights for the little guy. If this is a token gesture by the White House to gain approval for a free trade deal with South Korea, it is one of the wiser trade moves this admin will make (a low standard, for sure). South Korea is a thriving democracy and has been an ally, and wages there are comparable to ours, so we will be less subject to the kind of dumping of low-quality cheap goods that we get from China.

Trade agreements should make geopolitical and economic sense. Economic trade with China during the cold war made sense because it further alienated the Soviets, in a post cold war world, it only makes sense that trade be more diversified.

Then, when I read stories like the Chinese lady who fell six stories onto a pile of human excrement, I breath a sigh of relief. Perhaps China is a paper dragon after all.

Outsourcing Fast Food?

I could see that as the next logical step

Posted at 10:49 pm by Johnny B

Horrendous wage gougers

Thursday, November 17, 2005
Horrendous wage gougers
Seriously, these people rebuilding New Orleans should be brought before a Senate committee pronto. How dare they demand higher wages for their work simply because the market allows it. There should be some kind of law against this. An interesting take here.

Posted at 06:57 pm by Johnny B

Posted by Jordan @ 11/18/2005 02:43 PM PST
Nice post, Johnny!
Excesses of the market, gotta love ’em.

Free Trade According to NPR

On NPR today I heard this: “It’s a victory for the federal government over the free markets today, which might sound strange coming from an administration and congress run by the GOP” (ha ha ha HA ha! says I). Then they say something like, “The Chinese company retracts its bid for Unocal. etc etc.” But isn’t it more like “free trade” to allow a private sector company to remain in the private sector, rather than allow it to go to a “corporation” in which the Chinese government has a 70% stake. Sounds to me like that’s keeping Unocal out of the Chinese public sector. At any rate the administration did nothing about the situation, and the congress preened about like they always do, but did nothing either. The stock for all three companies went up, Chevron raised it’s bid, and the Chinese government feels important about itself. Everybody wins except the folks at NPR and the NYTimes, who, overwraught with self-loathing, secretly wish the Chinese could have bought out Unocal…and Dow Chemical, and Exxon, and Eli Lilly, and General Electric…