Kids, don't mess with Coke,

No not the drug in this case (although you shouldn't mess with that either) but the pop (or soda).

Jail for Coke recipe thief

One Atmosphere, One Market?

On Singer:

I was worried at first where Singer was going with his policy recommendations. Knowing some of Singer's other beliefs (that everyone making over marginal utility, i.e. the median income, should give all excess to developing nations) I was curious as to what Singer would suggest to solve the global warming crisis. His suggestion was reasonable, establish a global carbon trading scheme based on per capita emissions. While such a policy would be difficult to implement globally, I feel it is optimal for three reasons.

1) A carbon trading scheme would incorporate market forces into remedying the current problem of social costs not being equal to private costs. As the Butler piece said, one way of rectifying pollution is to assign private property rights. The private property helps equalize the difference between the previously mentioned social and private costs. With the atmosphere this is a difficult task. A carbon trading scheme would implement so form of property rights through the use of quotas. Note, that this is an indirect method, though it is the most feasible. Accordingly, flaws will still exist and social vs private costs will not be fully equalized.

2) Carbon trading is probably the cheapest yet most effective way to help the environment. I say probably because the full effects of climate change have not yet been documented (and won't be until after the fact). This plan directly targets the negative externality, that is CO2, and minimizes spill over effects. That keeps costs low and forces firms and states to reduce CO2 and not necessarily industrial production, but rather those industries that are least efficient. I would much rather have a non zero sum game that forces all players to develop and innovate than wait and try to minimizes the global effect from climate change.

3) Such a system is the only practical solution for dealing with global warming. There are two possibilities in regards to human instigated global climate change:

a) we are causing it
b) we aren't causing it/it's not really happening

If b is true and we implement a trading system, what have we lost? Increased amounts of CO2 in the air. In essence, we have minimalized a pollutant. The pay off may not be that great to some, but consider the alternatives. We do nothing and global warming is in fact caused by humans. We are now forced to pay the costs of adapting to the new situation (To say nothing of the potential spillover effects in disease, agriculture, and insurance). The other possibility is that we implement a far more bureaucratic and draconian system. No matter what the circumstances, carbon trading seems to be the best option.

(On a side note, it is commonly said that countries who trade together, fight less. If so, I wonder what effect carbon trading would have on international diplomacy.)

This just in....

Reports now indicate that Wolfolitz will resign this June. Hmm, what British Prime Minister steps down at around the same time.....

A bet

In light of recent insider information, I am going to go out on a limb here and bet that Tony Blair will be the next President of the World Bank. I don't know about you, but I am excited about more years of Blair in the public eye. I need my daily does of Centre-left British Politicians with cool hair.

On Wolf + The Corporation

The corporation is an interesting creature. While absolutely necessary for modern capitalism, it remains one of the free market's starkest opponent. When judging the value of the modern corporation, it is first necessary to note that each and every corporation is different. Business methods, objectives, products, and leadership all differentiate one corporation from another. So when criticizing the multinational corporation, it is important necessary to be as specific and directed as possible. It is also important to recognize that within a single corporation, different companies and branches can exist.
I based on what I said above, I don't think it's fair to say that the corporation as a whole is a bad thing. Furthermore, I don't think corporations as a whole are responsible for the current state of the developing world. I do think that overall corporations role has been extremely positive to the economic growth of the developing nations.
One of the dangers from the Left's criticism of corporations as a threat to the globe is that it homogenizes the various firms out there. By doing so, they lump the good with the bad, and assign both a moral equivalence when one definitely does not exist.
Having said all that, I feel that anyone with a true pro-market stance must approach multinationals with the same skepticism reserved for the state. Too often, individuals sympathetic to capitalism feel the need to identify with companies. However, being probusiness undermines markets. Companies have it in their interest to fix the rules of the game (through the legislative process) so that competition is minimized or outright eliminated. Any policy supported by the business community should be examined closely. One must ask who this policy favors, whether it enables more or less competition, and if said policy enables economic liberty.
I think the most valid criticism launched against large sized corporations is their role within the legislative process. TRIPS, $90 billion dollars in corporate welfare, the CAP, and other policies are all anti-market, but pro-business. These policies were crafted because of corporate influence. Imagine then, that if companies can get significant policies enacted in the developed world, then the degree of influence exerted over small, static economies must be greater.
But like Wolf said, this is an unfortunate side effect from democracy. Instead of wide reaching reform minimizing lobbying power, greater activism is needer on the part of other sectors of society, especially the free-market element. But this is a matter for another post.

Vermont = Tax haven?

Who Knew?

Green Mountain Tax Haven
http://www.projo.com/opinion/editorials/content/ED_vermont11_05-11-07_SK57N65.1cc1b18.html

Where to spend those dollars?

A quick post, on where China's is spending it's windfall.

Consequences of Abdication

More to explore with this in a later post.

Property rights + forests = more forests?!

Want to protect forests?
Enforce property rights. So says the Economist.

The tragedy of the commons

The Yankees

Why are the yankees in last place?!? Seriously, what gives? I can only imagine what this will do to free trade! A falling hegemon means more restrictions to trade, the yankees are/were a hegemonic power (in baseball), therefore less trade.

On Stiglitz

As I sit here coughing my guts up, I reflect on the fortune I have received on being born in America. Right beside me sit the anti-biotics I need to get better. I can't imagine not being able to access those drugs, because of someone's profit margin.

While I am skeptical of some of Stiglitz's plans for encouraging drug development for the developing world, I completely agree with him that reform is needed of the patent system. Information is key to markets, and while companies do have the right to their inventions, this right cannot be valued to the point of market monopolies and human suffering.

They're Coming!

It's an invasion I tell you.

Royal Couple Arrives in Virginia

I bet the real reason she is here is to take back the colonies. You can never be too sure with those British.

My Oh My

In the small town in Ohio in which I live, there used to be a family who moved here temporarily from Venezuela. The two kids went to the local high school, the father owned a small grocery store, and the mother taught Spanish at the local Catholic grade school, which I attended. My family and hers became close friends, and we learned a bit about their background. They told us that the mother was born into a pretty wealthy family back in Venezuela, but they gave it all up so they could live as part of the American middle class.

Eventually, because of some complexities, they had to move back to Venezuela. I feel really bad, because now they have to live under the rule of that idiot, Chavez.

But wait, you say, it's not good to use ad hominem attacks against people you disagree with. To call someone a name gets you no where. I agree wholeheartedly, I would never dare call Royal, Chomsky, or Lula a name. But for Chavez I make an exception.

It's legitimate to question globalization up unto this point. It's ok to criticize America's actions on the Iraq war. It's good to disagree with the status quo, and offer a different path. It's great to be passionate about your positions, whatever they may be.

But Chavez is none of that. He's an authoritarian, anti-capitalist, anti-democrat demagogue.

Why?

Well there are many reasons. Such as the consolidation of the main parties in Venezuela, the rewriting of the constitution, the numerous failed price control schemes, or his uncouthness towards the U.S. and Europe. All of those could be a blog post in and of themselves, but I would like to focus on one specific event.

Venezuela takes operations from big oil companies.

First of all, say what you will about big oil companies (they're a bunch of heartless bastards, I agree) but seizing their property and forcing them to sign it over to the state government is not cool. Furthermore, saying asinine things like "Open investment will never return" is not a good advertising slogan to send companies thinking about investing in Venezuela.

The problem with nationalizing oil fields is three fold. First, the state company (in this case PDVSA) does not have the managerial or scientific know how to keep the oil churning, and keep the money flowing back into Venezuela. Second, most likely any form of meritocracy will break down, and the people running these oil fields will not be the ones with the best experience or skills but rather with the closest connections to Chavez and his administration. Third, and most important, what major company is going to invest in Venezuela? When the possibility emerges that a factory or oil refinery you bought could be nationalized without warning, you are less likely to invest in that nation. Sustainable investment by foreign sources generally helps a country. There are times when foreign companies can do more harm than good, but one does not and should not deal with that problem by using decrees to make counter productive populist actions.

Ultimately though, who will all of his policies hurt?

Not him, for if anything goes wrong, he can blame it on "evil capitalists" or "price speculators."
All of the people in Venezuela will get hurt, from the rich to the poor, as foreign investments dries up.

Best Economist Article Title of All Time

"'Omigod' Investing in Stage Musicals is, like, totally hot."

First Post!

I must admit, I am a bit biased when doing these readings. I love capitalism. If they made posters of Milton Friedman or Friedrich Hayek, I would hang them on my wall. It's the coolest thing since sliced bread. Nonetheless, I'll be the first to admit that capitalism has some flaws. Why? Capitalism is the only economic system, as supported by Wolf and others, that reflects human nature. It doesn't try to picture humans as saints or sinners, but as what we are. And for that reason, it works.

But as I did say before, capitalism has some flaws. However, I believe that many of the supposed negative effects of capitalism are in reality faults of some government or state somewhere along the line.

Let me give you a perfect example.

Agricultural Subsidies.

Anti-globalization/anti-free trade/fair trade activists like to state that free trade is destorying the farmers of the developing world. As soon as some developing country lets down their trade boundries, American agricultural products come flooding in, destroying any Joe or Jane farmer in their wake. Unless it's a product difficult to grow in the U.S., the U.S. will soon dominate the market.

It is here that I begin my first critique of Wolf. Wolf is a great guy, don't get me wrong, but the system today is broken, but not exactly how Stiglitz describes it. Globalization has failed in the regard that the developed world (i.e. Europe, the U.S., and Japan) are not playing the free trade game all the way. Sure, they're forcing foreign countries to liberalize their trade regimes, but they are not doing the same in response. I mean, look at the Softwood Lumber Dispute, the paper tariffs, the Dubai port deal, or the Unocal bid. Trade liberalization works, but both sides must liberalize for the full effects to develop and also for trust to emerge (which Wolf says, is a necessary condition for markets).

So how does this all relate back to farm subsides?

The OECD spends around $279 billion per year in farm subsidies. How are poor farmers expected to compete? Answer, they can't.

That's alot of money. Stiglitz is right on this one, subsidies are destorying free trade.
And who is responsible for all of these subsidies?

The governments of the OECD countries.
So back to my original point, yeah capitalism has some flaws. But one must be careful before ascribing something they see wrong to the capitalist order.

Dane's Blogarific Blog

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China's Economy! Woot!