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Monthly Archives: July 2009

cellphoneThe irksome cellphone industry is another article calling for antitrust regulation in the US. The author mentions that congress is investigating the industry and the quirky reasons to expect that there is something very anticompetitive going on. Like–

  • text messaging fees suddently doubling–for all carriers at about the same time
  • double billing–both the caller and the one called
  • subsidizing phone costs with extravagant monthly fees
  • expensive international calls–when Skype is free
  • useless operator instructions to lengthen calling time

Simply compare the cost of using a cell phone in the US to anywhere else in the world. It is much more expensive and that alone is reason enough to investigate the industry and fine the companies appropriately.

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co2Another editorial on Cap and Trade. This little debate has been going on a long time, and is not likely to end soon. We should limit carbon emissions and let people pay for it, or just tax carbon?

If your neighbors were making a terrible racket, would you offer to pay them to stop?

Of course not.

Sure, they’ll stop today. But they’ll soon be clamoring for more payments.

One of the major features of the Waxman-Markey cap-and-trade bill – the ambitious climate change legislation recently passed by the House – offers just such payments. It pays polluting countries not to pollute. And, as with the noisy neighbor, this will just encourage a continuing racket.

The authors go on to argue that expecting cooperation from countries like China and India is unrealistic, and enforcing cap-and-trade will be impossible.  A tax would be more practical.

But will a tax not require cooperation? And do you really think the US is likely to pass a new tax on things like gasoline and heating oil? It will never happen, especially if other countries are slow to sign-up.

And I am still tired of Americans putting the onus of climate change on the developing world. Americans, per capita, are still, easily, the worst polluters anywhere.

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monopoly-gameFrom the NY Times–an interesting battle is developing between the US Justice Department’s Antitrust Division and pro-business advocates in congress and the white house.

The more aggressive antitrust policy was described in interviews with officials at the White House, the Justice Department, other agencies and Congress. It is a major policy reversal from the Bush administration, which did not prosecute cases in which some dominant companies engaged in potentially anticompetitive behavior, often because those officials maintained such behavior was not harmful to consumers.

Right. Not harmful to consumers, just their bank accounts.

In some cases, though, the new approach is being opposed by administration officials. Some fear that the crackdown is coming at a bad time, as corporate America reels from the recession. Other officials embrace the Bush administration’s view that larger companies and industry alliances can provide consumer benefits by making their businesses more efficient.

Yes, we know about economy of scale, and even J.K. Galbraith’s old arguments about surplus being needed for proper research and development of new products and production techniques. Antitrust is good for the economy because it expands the buying power of the consumer, it’s just not good for big business profits. The antitrust people know about this stuff too. And you know what? Their decisions are not subject to doubt because of their debt to big business. Where did those campaign dollars come from again?

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Finally, an aid policy that really makes sense, and–collectively–it may work as a global economic stimulus as well.

A United Nations agency said on Thursday it was giving researchers in least developed countries subscriptions to scientific journals worth $400,000 a year, to help spur more worldwide inventions.

The World Intellectual Property Organization said the 50 LDC countries would get some 64 technical publications free online, while 58 more developing nations would get them for $1,000 a year.

These kinds of projects are so rare, I think because the benefits are so vague and impossible to measure. Policy makers, generally, can not pursue projects without a defined, positive outcome. The difference here, presumably, is the very low cost of the project. Subscriptions worth $400,000, but nobody is subscribing from these places anyway.

What would be a good image for this post?

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silver-liningTurn economic setback into opportunity–this is a nice sermon, or political speech–maybe even a script for a life tutor dealing with a depressed patient–but it is hardly helpful or informative for most people. Yeah, getting laid off gives you time to try alternative ways to spend your time, and if you have some money laid aside, you might open your own business or try some volunteer work, like mentioned in the article.

Truth is, one of the problems of this recession is that people were overspending and unable to keep up with their debt. Those people get laid off and they have to find a job quick, even if it means flipping burgers for some fast-food joint, or mopping floors somewhere. That is the reality more often than not.

Opportunity? The opportunity was always there, and even more so when the economy is strong. This message only works for people like the former Wall Street couple mentioned in the  article.

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chinasafariThis book review gives some insight on China’s investment and deal-making with many African countries. Namely, why are the Chinese in Africa, and how is it different than the colonialism of European states?

For the first question–

The authors contend that China’s ambitions in Africa are grandly geopolitical as well as economic. As Jacob Wood, a Shanghai-born housing developer based in Africa for more than 30 years, tells them: “I’m going to be honest with you, China is using Africa to get where the United States is now, and surpass it.”

As for any possible differences between China’s presence and the European’s–

Many African leaders are enamored of the Chinese mix of authoritarianism and capitalism in business affairs, an emphasis on efficiency and a lack of preaching about human rights, the authors say. Moreover, when the Chinese talk, they back up their words with concrete actions.

“The Chinese build things, the Europeans don’t,” declares Claude Alphonse N’Silou, the minister of construction and housing of the Congo Republic.

Of course, most of China’s investment there is for natural resources–mining, oil, timber–and I suspect most of the infrastructure projects support harvest and transport of those resources. Bilateral trade between China and Africa reached 55 billion dollars in 2006.

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Karl_MarxMore and more the headlines make me think of Marx, but none so much as this–Two Giants Emerge From Wall Street Ruins.

Forget revolution of the proletariat and all that. Let’s look at the foundation of Marx’s argument that capitalism is a destabilizing economic system. Economic growth leads to surplus, decreases in spending bring about recession, capital prices move lower, and the stronger companies are able to buy-out the weak companies at a bargain, reestablishing growth.

The one overriding trend? Greater and greater concentration of productive capacity and market share. As the owners of larger and wealthier firms, the capitalists gain power and influence over government and policy, increasing the divide between rich and poor. That, according to Marx’s dialectical materialism, is what drives the major conflicts and changes of history.

Of course Marx’s followers used the argument to justify armed revolution, but it is not completely clear that is what Marx intended. That point, in fact, may explain Marx’s statement  from his deathbed, “I am not a Marxist.”

As J.P. Morgan and Goldman Sachs begin to dominate financial markets, we also see demands that government take more control and establish guidelines for how the market will run. Does not seem like a revolution, but it sure sounds socialist.

As an educator, the real point for me is that Marx needs to find his way into our economics curriculum.

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ruby_slippersI recently started a new book called Discovery of the Asylum. The first chapter gives a thorough description and feasable explanation for the development of  a strong ethical culture in 18th century New England. The culture emphasized contribution to local society and was careful not to allow freeloaders into the area. Newcomers were often asked for a recommendation from their last home town.

The origins are largely religious in origin and sound Calvanistic to me. ‘Just watched Wizard of Oz with my daughter. When Dorothy says, “There is no place like home,” I thought it a similar kind of ethical teaching.

Now I run into an editorial by Marshall Blonsky, the author of American Mythologies. He describes a contemporary version of a similar kind of ethical mind-wash. It is commercial, and I have often thought it is something that needs to be better described by economists.

Progressive signifies by connotation that suburban men, settling down to make households, are powerless, ashamed, bewitched, bothered, and bewildered by our new world of sterile postmodern marketing, not to mention assaults on their gated little communities. Their mantra: “I didn’t know that!” Ditto for the women.

And the Vesicare Bronzed? They are stripped of every aspect of the Person, their actions just maniacal pursuit without any object of desire. The citizens of Bronze City signify citizenry of all cities. All of us mindless, mechanical, just there. Things.

Using subcomedy to catch you unawares, “creative” ad directors hold this distorting mirror before you: Under fatal threat (“Incoming!”), the nation has to be militarized, yes? – you, just a civilian, knowing nothing about anything, everyone else just like you, a void.

The joke’s on you.

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trafficA man was questioned then released by police after he was seen throwing bricks at cars that were running red lights and endangering pedestrians. A poll was released on the Internet and 80% supported the man’s actions.

Me too. Chinese drivers are not careless drivers, in fact I find them to be overly cautious, but traffic laws are not enforced and most drivers act as thought they have the right to drive where they want, when they want, no matter if a pedestrian or cyclist is in the way. Actually, the working rule is that you must stop for anyone in front of you, but that encourages drivers to speed up and cut in front of other traffic. It looks like absolute mayhem to newcomers here.

Just yesterday I saw a taxi hit a cyclist, no damage or injury. The strange thing was that the driver immediately got out and started yelling at the cyclist, apparantly for being in his way.

One day people here will figure it all out. It is easy to forget that people have been driving here only for fifteen years or so, and 80% of drivers are driving their very first car.

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electric-scooterA bit ironic this–electric and hybrid cars are too quiet. People want the cars to make more noise because the quiet cars are a danger to cyclists, the blind, and children.

It is true, we depend on our hearing for lots of traffic information. I know because here in Suzhou there are thousands of electric scooters. While cycling I have cut in front of one twice, both times causing a minor collision. Of course I have adjusted my expectations and I now look behind me before I turn.

I say “ironic” because the noise of autombiles was always considered a negative. The article points to a study done in Sweden that links traffic noise to heart attacks. Now we want more noise from traffic?

If traffic noise is so essential to our safety, shouldn’t we ban the use of headphones/earphones by cyclists and pedestrians? I like the idea of quiet streets.

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