Blog of Q's

“April’s job growth is consistent
with the depressing pattern of US employment growth in
the 21^st century: The outsourced US economy
can create jobs only in domestic nontradable services.
…

Offshore outsourcing is a new
phenomenon that has received little attention from
economists, who mistakenly view offshore outsourcing as
just another manifestation of the beneficial workings of
free trade and comparative advantage. In fact, offshore
outsourcing is the flow of resources to absolute
advantage. Economists have known for two centuries that
absolute advantage does not produce mutual gains. Unlike
the operation of

comparative advantage, absolute advantage produces

winners and losers.

China and India are winning. America is losing. It
is as simple as that.”

First off, check out the newly launched Buzztracker (www.buzztracker.org),
put together by a 24-year old American expatriate in Tokyo, Craig Mod.
Mr. Mod started working a few years back on what he thought was an art
project — dots and lines representing news stories around the world
and the links between them. All very pretty, but the closer you looked,
he recalls, “suddenly land masses began to emerge and you started
forming associations.” News and geography were linked and Buzztracker
was born.

Launched last month, Buzztracker appears as a map of
the world, dotted with red circles of varying size. The circles denote
news stories gathered from Google News emanating from that location on
the date in question, the size depending on the amount of media
coverage. Each circle is linked by a gray line to other locations
mentioned in the stories. Click on a circle and you’re taken to a list
of news stories originating from that point.

It’s an elegant, simple view of what’s going on in the
world. But it’s more than that: The links underline the way that events
in one place are connected to those in other places — one great
example is the recent spat between China and Japan about how each
country was represented in respective textbooks, superficially resolved
by a summit in Indonesia. On Buzztracker you see a triangle of thick
red dots linked by thick gray lines. Such webs, Mr. Mod says, are
“supposed to get people thinking about why these connections exist.”

“Technology, globalization and
unfettered markets tend to erode wages at the bottom and lift wages at
the top. But Americans have elected politicians who oppose using the
muscle of government to restrain the forces of widening inequality.
These politicians argue that lifting the minimum wage or requiring
employers to offer health insurance would do unacceptably large damage
to economic growth.

Despite the widespread belief that the U.S. remains a more mobile
society than Europe, economists and sociologists say that in recent
decades the typical child starting out in poverty in continental Europe
(or in Canada) has had a better chance at prosperity. Miles Corak, an
economist for Canada’s national statistical agency who edited a recent
Cambridge University Press book on mobility in Europe and North
America, tweaked dozens of studies of the U.S., Canada and European
countries to make them comparable. ‘The U.S. and Britain appear to
stand out as the least mobile societies among the rich countries
studied,’ he finds. France and Germany are somewhat more mobile than
the U.S.; Canada and the Nordic countries are much more so.

Even the University of Chicago’s Prof. Becker is changing his mind,
reluctantly. ‘I do believe that it’s still true if you come from a
modest background it’s easier to move ahead in the U.S. than
elsewhere,’ he says, ‘but the more data we get that doesn’t show that,
the more we have to accept the conclusions.'”

by Alan Tonelson, Research Fellow, U.S. Business and Industry Council
Sunday, April 24, 2005

… My correspondent … believes that [CAFTA is] far from perfect from
a domestic textile industry standpoint, but at least it will enable
them to keep some business in selling fabric that would otherwise go to
the Chinese — because the agreement’s provisions ostensibly give
preferences for apparel assembled in Central America from U.S.-produced
materials.

I think he’s wrong …

Dear X:
…
Far from being a quixotic campaign to go back to the past, my
organization and I consider a wholly new U.S. trade policy to be our
nation’s only option for retaining a critical mass of manufacturing at
home, along with all the economic, social and national security
benefits that manufacturing creates.
…
One of the main goals of our effort is preserving America’s ability to
set trade policy priorities, and thereby ensure that the intended
beneficiaries of new trade agreements – both domestic and foreign –
actually receive these gains. That’s of course one of the stated
rationales for CAFTA, as your letter recognizes. But nothing about
CAFTA or the rest of current U.S. trade policy provides any reason to
suppose that signing this agreement will produce these results.

In the first place, CAFTA contains many loopholes that will directly
undercut the important goal of helping Central American producers
maintain or create competitive advantage vis-