February 25, 2012

Krugman: European Crisis Realities (the Republican story, the German story, and the truth)

There are basically three stories about the euro crisis in wide circulation: the Republican story, the German story, and the truth.

The Republican story is that it’s all about excessive welfare states. How does that hold up?



Hmm, only Italy is in the top five — and Germany’s welfare state was bigger.

OK, the German story is that it’s about fiscal profligacy, running excessive deficits. Here’s the average budget deficit between 1999 (the beginning of the euro) and 2007:



Greece is there, and Italy (although its deficits were not very big, and the ratio of debt to GDP fell over the period). But Portugal doesn’t stand out, and Spain and Ireland were models of virtue.



What we’re basically looking at, then, is a balance of payments problem, in which capital flooded south after the creation of the euro, leading to overvaluation in southern Europe.

And the key point is that the two false diagnoses lead to policies that don’t address the real problem. You can slash the welfare state all you want (and the right wants to slash it down to bathtub-drowning size), but this has very little to do with export competitiveness. You can pursue crippling fiscal austerity, but this improves the external balance only by driving down the economy and hence import demand, with maybe, maybe, a gradual “internal devaluation” caused by high unemployment.

...what the Europe really needs is a general European reflation. So let’s hope that they get this ...

http://krugman.blogs.nytimes.com/2012/02/25/european-crisis-realities/

February 23, 2012

Center for American Progress: Study - "Self-Deportation" is a myth.

Arizona, Georgia, and Alabama recently took matters into their own hands by passing laws designed to criminalize virtually all activity engaged in by undocumented immigrants. This patchwork of state and local laws is driven by a strategy known by immigration restrictionists as “attrition through enforcement.” The goal is to create a climate of fear and make life so difficult for immigrants that they will self-deport.

So have state anti-immigration bills led to an exodus of unauthorized migrants from the United States as restrictionists have promised?

Immigrants’ reaction to anti-immigrant laws

Based on the experiences of immigrants in Oklahoma City, and in more recent cases such as Arizona after S.B. 1070, we find that:

1. Most unauthorized immigrants make the decision to stay in the country despite attempts to drive them out. The proliferation of state-level anti- immigrant laws has not changed the calculus for immigrants when it comes to choosing to stay here or return home.

2. At best, anti-immigrant laws simply drive immigrants from one area to another—say from one county to the next, or from one state to the next— rather than from the country. [i[At worst, they further isolate immigrants from the communities they live in and from local law enforcement, while driving families deeper into the shadows.

The reasons behind their decision to stay

So why aren’t immigrants leaving the country in response to these laws? There are several reasons.

Most undocumented immigrants have been in the country for 10 years or more, and the majority live in family units with children, meaning that they are well settled into American life, making it less likely that they would want to leave.

The costs of a return trip also are too steep for most people.

Finally, the stark lack of opportunities in the migrants’ home countries—which pushed them to enter the United States outside of legal status in the first place—have not gone away, leaving them with little reason to believe that life would be better there than in the United States.

http://www.americanprogress.org/issues/2012/02/mexico_immigration.html

Of course most republicans already know that 'self-deportation' is a myth. Believing in the myth, however, conveniently "further isolates immigrants" and drives them "deeper into the shadows". The myth of 'self-deportation' is a conservative dream-come-true: the illegal immigrants stay here and become even more exploitable ("isolated" and "driven into the shadow&quot than they were before.

February 10, 2012

Juan Cole: The Dilemma over Syria (like the crushing of the Prague Spring in 1968

great power sphere of influence politics made it impossible to do anything practical about it).

http://www.juancole.com/2012/02/the-dilemma-over-syria.html

Syria’s military continued its brutal assault on neighborhoods of Homs, a center of civil disobedience against the regime, on Thursday, killing over 100 persons, including children. This deployment of military force against civilians who were protesting is a war crime, and part of a pattern that by now amounts to crimes against humanity. The first thing that comes to mind at these horrific images is that something should be done. But what?

Sen. John McCain has called for arming the rebels ... I would argue an even stronger case against. Once you flood a country with small and medium arms, it destabilizes it for decades. If people don’t think a flood of arms into the hands of Syrian fighters will spill over onto Turkey, Jordan, Iraq, Lebanon, and Israel/Palestine, they are just fooling themselves.

Ultimately, the problem of legitimate action here lies in the UN Security Council. ... As for legitimate use of force, I am against wars that do not stem from either self-defense or from a UN Security Council resolution. I wouldn’t necessarily support any old war the UNSC authorized, but its authorization is a sine qua non.

The first thing the (European) diplomat underlined is that there is no United Nations Security Council authorization for the use of force, so no European country will use force. It was a refreshing reminder that in Europe the UN Charter and international law is still taken seriously. In the US, mention of international law is usually greeted with gales of derision.

I gradually realized that if any semblance of the international rule of law were to be maintained, the international community could do nothing kinetic as long as Russia and China were running interference for the Baath regime in Syria. The logjam here is the Security Council, and its archaic veto privileges for the 5 permanent members, essentially the victors of WW II who still make policy for the whole world.

If you want practical action or even military intervention in Syria beyond financial and economic sanctions, there are only two ways to get it legitimately. That would be to find a way to pressure Russia and China to stop protecting Bashar al-Assad. The other possibility would be to find a way to abolish the one-country veto on the UNSC.]/i]

I remember my anger and despair, as a teenager, at the crushing of the Prague Spring by Soviet tanks in 1968. I feel the same way about Syria today. But in both cases, great power sphere of influence politics made it impossible to do anything practical about it. The hope lies only in the longer term. ... Syrian dissidents will just have to keep up a non-violent struggle for the truth that might go on for a while. If they can prevail non-violently, their revolution would immediately be more well-grounded and likely to succeed.

February 5, 2012

Is it considered liberal or conservative to support hundreds of thousands of demonstrators

who protest for months on end against a dictatorial government? Liberal

Is it considered liberal or conservative to side with the authoritarian government that kills thousands of civilians who refuse to stop protesting against said government? Conservative

Is it considered liberal or conservative to believe that some countries need to be ruled by dictators because the people who live within their borders cannot learn to live with each other? Conservative

Is it considered liberal or conservative to believe that all people have a right to political and civil liberties and to self-government? Liberal

Is it considered liberal or conservative to tell people in certain countries that they have to live with authoritarian governments because there are more important geopolitical issues at stake, so their personal rights and liberties have to take a back seat? Conservative

January 30, 2012

Bookmarked. A really great essay! Thanks for posting it.

"Our solidarity should be with activists who march on Tahrir Square in Cairo or set up encampamentos in Madrid. These are our true compatriots. The more we shed ourselves of national identity in this fight, the more we grasp that our true allies may not speak our language or embrace our religious and cultural traditions, the more powerful we will become.

Those who seek to discredit this movement employ the language of nationalism and attempt to make us fearful of the other.

Those with whom we will build this movement of resistance will not in some cases be our own. They may speak Arabic, pray five times a day toward Mecca and be holding off the police thugs in the center of Cairo. Or they may be generously pierced and tattooed and speak Danish or they may be Mandarin-speaking workers battling China’s totalitarian capitalism. These are differences that make no difference.

“My country right or wrong,” G.K. Chesterton once wrote, is on the same level as “My mother, drunk or sober.”

Our most dangerous opponents, in fact, look and speak like us. They hijack familiar and comforting iconography and slogans to paint themselves as true patriots."

January 28, 2012

Fordney-McCumber Act, 1922 with its "scientific tariff" tied to the wages in the country of export

"Woodrow Wilson believed in low tariffs. He had reduced tariffs in 1913, and refused to increase them.

As soon as he became President, Warren Harding passed an Emergency Tariff (May 1921) to increase duties on food imports, and in 1922 Congress passed the Fordney-McCumber Tariff. This had two principles:

a. 'Scientific tariff': this linked tariffs to the wages in the country of export. If wages in, say Italy, were very low, then Italian goods were given a proportionately higher tariff. This negated the effect of lower wages in competitor countries.

b. 'American Selling Price': this linked tariffs to the price of American goods, not to the cost of production. A German company might be able to produce, say, a certain chemical for $60, but if the selling price in America was $80, and the US tariff was 50%, the tariff would be $40. This meant that foreign imports were ALWAYS more expensive than American-produced goods, however cheaply they had been made.

The Fordney-McCumber Act established the highest tariffs in history, with some duties up to 400% and an average of 40%."

http://www.johndclare.net/America3.htm

The Fordney-McCumber Tariff was familiar but this is the first explanation of the "scientific tariff" in it that I have read.

January 27, 2012

Here we go again. All of our problems are due to trade with those evil poor foreigners.

Let's do the "progressive" thing and build walls around the country to keep out immigrants and products made by these unsavory poor folks.

To do so would be stealing from the republican playbook of 1921 to 1930 when they passed two restrictive immigration laws (1921 and 1924) and two tariffs laws (1922 and 1930).

Until 1980 the republicans were the party of high tariffs (and restrictive immigration laws) and the Democratic Party promoted low tariffs (and liberal immigration laws such as the 1965 act). Since the republicans dropped their high-tariff policy in 1980's (and converted to FDR's commitment to promoting international trade), progressives are supposed to start pushing it in their place?

Bill Moyers had a great show a couple of weeks ago on how the progressive "socialist" countries of Europe have promoted a strong middle class. They have encouraged global poverty reduction while at the same time promoting employment and income equality at home. To summarize the show: Our economic problems are not caused by "others" but by actions that "we" have done to ourselves - repeatedly cutting taxes for the rich, weakening our unions, slashing our safety net, deregulating to the point of absurdity, etc.

Countries that have not cut taxes for the rich, weakened unions, slashed safety nets and recklessly deregulated have weathered the Great Recession relatively much better than Americans have with stronger economies, more equality and a stronger middle class, even though they trade with "poor" countries at a much higher level than we do.

In Europe they explicitly trade more with the Third World as a part of their global development strategy designed to help the poorest. Over the last 20 years it has been successful, as the UN's statistics show, while domestic economies in these progressive countries have continued to provide good jobs and better pay despite the global recession (which was caused by the US' financial industry, not by poor Third World workers).

http://billmoyers.com/episode/on-winner-take-all-politics/

January 16, 2012

Krugman: 85% of consumer spending in America is on American-produced goods and services

Not So Global

http://krugman.blogs.nytimes.com/2012/01/16/not-so-global/

Barry Ritholtz sends us to a San Francisco Fed paper from last summer that makes a point on which many people seem confused: despite globalization and all that, the bulk of a consumer dollar spent in America falls on American-produced goods and services.

The reason this matters — or at least one reason it matters — is for discussion of austerity, stimulus, and all that. I often get comments along the lines of “Well, maybe stimulus worked back in the old days, but now it just means spending more on stuff from China”. In reality, that’s nowhere near true.

Why? For one thing, most consumer spending is on services, few of which are really tradable. For another, even if the thing you buy in WalMart says “Made in China”, the price includes a lot of US value-added in the form of transportation and retailing costs.



So we’re still a country where about 85 cents of your consumer dollar is spent at home, one way or another. And this means, among other things, that the rules of macroeconomics haven’t changed nearly as much as people imagine.

Canadians spend about 75% on domestic goods and services, Germans about 70%, Swedes less than 60%. Less than 2% of consumer spending here is on Chinese-produced goods.

January 12, 2012

Not surprisingly, many European countries are near the bottom in HO's "labor freedom" category.

Unfortunately the US is ranked #1 in "labor freedom" (weak/no unions) (after excluding Afghanistan, Iraq, Somalia and Sudan which had no rating). Ouch!

Europe also ranks at the bottom in "fiscal freedom" (low taxes) with Sweden, Denmark and Belgium the top 3. The same is true with "government spending" with Denmark, Belgium and Austria as the top 3. Europe does place 20 out of the top 25 in "trade freedom". (Canada is 7th and the US is 37th.)

The Heritage Foundation is about as conservative as you can get. Their "freest economy" rankings look like that they can be useful if you use them in reverse. The really progressive countries score very low in many of their categories, so that it what you have to look for.

http://www.heritage.org/Index/explore

January 12, 2012

The Great Migration is little known or taught in the US.

The Great Migration was the movement of 6 million blacks out of the Southern United States to the Northeast, Midwest, and West from 1910 to 1970. Some historians differentiate between a Great Migration (1910–30), numbering about 1.6 million migrants, and a Second Great Migration (1940 to 1970), in which 5 million or more people moved and to a wider variety of destinations. From 1965–70, 14 states of the South, especially Alabama, Louisiana, and Mississippi, contributed to a large net migration of blacks to the other three cultural (and census-designated) regions of the United States. By the end of the Second Great Migration, African Americans had become an urbanized population. More than 80 percent lived in cities. 53 percent remained in the South, while 40 percent lived in the North and 7 percent in the West.

When the Emancipation Proclamation was signed in 1863, less than eight percent of the African American population lived in the Northeastern or Midwestern United States, but this would begin to change over the next decade. The already recognized migration would be investigated by the U. S. Senate in 1880. By 1900 this figure would increase by about 25%, with about 90 percent of blacks still living in Southern states.

While the Great Migration helped educated African Americans obtain jobs, eventually enabling a measure of class mobility, the migrants encountered significant forms of discrimination. Because so many people migrated in a short period of time, the African-American migrants were often resented by the urban European-American working class (often themselves recent immigrants); fearing their ability to negotiate rates of pay or secure employment, they felt threatened by the influx of new labor competition.

Migrants often encountered residential discrimination, in which white home owners and realtors prevented migrants from purchasing homes or renting apartments in white neighborhoods. In addition, when blacks moved into white neighborhoods, whites would often react violently toward their new neighbors, including mass riots in front of their new neighbors' homes, bombings, and even murder. ... By the late 1950s and 1960s, African Americans were hyper-urban, more densely concentrated in inner cities than other groups.

http://en.wikipedia.org/wiki/Great_Migration_(African_American)

Chicago Race Riot of 1919

The sociopolitical atmosphere of Chicago was one of ethnic tension caused by competition among many new groups. With the Great Migration, thousands of African Americans from the South had settled next to neighborhoods of European immigrants on Chicago's South Side, near jobs in the stockyards and meatpacking plants. The ethnic Irish had been established first, and fiercely defended their territory and political power against all newcomers. Post World War I tensions caused frictions between the races, especially in the competitive labor and housing markets.

Beginning in 1910, thousands of African Americans started moving from the South to Chicago as one destination in the Great Migration, fleeing lynchings, segregation and disfranchisement in the Deep South. The Ku Klux Klan committed 64 lynchings in 1918 and 83 in 1919 in southern states. With the pull of industrial jobs in the stockyards and meatpacking industry beckoning as European immigration was cut off by World War I, from 1916 to 1919 the African-American population in Chicago increased from 44,000 to 109,000, for a total of 148 percent during the decade.

The riot lasted for nearly a week, ending only after the government deployed nearly 6,000 National Guard troops. They stationed them around the Black Belt to prevent further white attacks. By the night of July 30, most violence had ended. Most of the rioting, murder, and arson was the result of ethnic whites attacking the African-American population in the city's Black Belt on the South Side. Most of the casualties and property damage were suffered by blacks.Newspaper accounts noted numerous attempts at arson; for instance, on July 31, more than 30 fires were started in the Black Belt before noon and were believed to be due to arson. Steel cables had been put across the streets to prevent fire trucks from entering the areas.

United States President Woodrow Wilson pronounced white participants the instigators of the prolonged riots in Chicago and Washington, D.C.....The riot shocked the nation and raised awareness of racial problems. It also demonstrated the new willingness of African Americans to fight for their civil rights despite injustice and oppression.

http://en.wikipedia.org/wiki/Chicago_Race_Riot_of_1919