Trade
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Infrastructure - the quiet crisis |
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Written by Stumo
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Friday, 09 May 2008 |
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We don't here a lot about it, but we experience it every day.
The U.S. infrastructure is crumbling. Potholes multiply,
certainly. And bridges are in disrepair. But our electrical
transmission lines lose gargantuan amounts of electricity between
generation and consumption. Our internet lines do not reach rural
citizens, who struggle with 1994-era dial-up access.
Here is a good piece in the WaPo about infrastructure. The topic is fundamental, but not yet sexy.
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The healthy leavening effect of manufacturing and agriculture |
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Written by Stumo
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Friday, 09 May 2008 |
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Forgive my repetitive focus on the NY Times editorial board, but
they are really a study in inconsistency. Bipolar perhaps, in a
vague metaphorical way.
The board pushes free trade
agreements that are a substantial factor causing manufacturing
loss. In other regular written forays, the board complains of
Asian environmental devastation and U.S. income inequality - without
causally connecting them to the current flavor of free trade policy.
Today, the board has a very insightful editorial, "Down and Out in Connecticut."
Over the past two decades, of all the 50 states, income inequality
increased the most by far in Connecticut and not only because of the
outsize gains of the states many hedge fund managers. ...
Over the last 20 years, Connecticut has lost a third of its
manufacturing jobs, replacing them with lower paying service-sector
jobs. Virtually no additional jobs have been created. ...
Connecticuts schools are big underperformers. The gap between the
educational performance of low-income and middle- and high-income
pupils is the widest in the nation. ...
The loss of manufacturing jobs, coupled with an achievement gap, is a recipe for perpetually worsening poverty.
I have lived in Connecticut. That which they say is
true. It is fundamental, economically and societally. The
inequality and squandering of opportunity is happening across the
country. The trade policy they espouse causes that which they
decry.
The role of agriculture in rural America is the similar the
positive manufacturing dynamic in a more urban community.
Agriculture founded upon millions of independent entrepreneurs is a
great wealth generator, a great class and wealth equalizer, and a great
community builder.
This is not to argue for eliminating service jobs. It is
an argument for balance, and for recognition of how to preserve and
build an economy. And a society.
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More China espionage issues |
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Written by Stumo
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Friday, 09 May 2008 |
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Duly noted:
Counterfeit products are a routine threat for the electronics
industry. However, the more sinister specter of an electronic Trojan
horse, lurking in the circuitry of a computer or a network router and
allowing attackers clandestine access or control, was raised again
recently by the F.B.I. and the Pentagon.
The new law enforcement and national security concerns were prompted by
Operation Cisco Raider, which has led to 15 criminal cases involving
counterfeit products bought in part by military agencies, military
contractors and electric power companies in the United States. ...
Arrests have been made in China as part of the investigation, she said.
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The Constitution Abhors Fast Track |
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Written by Stumo
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Sunday, 04 May 2008 |
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The U.S. Constitution allocates power among three competing
branches: legislative, judicial and executive. The power
over foreign commerce was bestowed on the legislative branch.
Fast Track Trade "Promotion" Authority - which is import/outsourcing
promotion authority - was transferred from Congress to the
Executive. Now we are stuck again with considering the Colombia
FTA which entrenches the NAFTA model and ignores the fundamental
problems of VAT tariffs, currency manipulation, product standards,
rules of origin and outsourcing.
George Will today wrote about how conservatives used to dislike unchecked power in the federal executive - i.e. the President.
At the 1787 Constitutional Convention, only one delegate (from
ever-bellicose South Carolina, naturally) favored vesting presidents
with an unfettered power to make war. Presidents, it was then thought,
could respond on their own only to repel sudden attacks on the nation.
"The Founders," says former representative David Skaggs, a Colorado
Democrat, "counted on the competitive ambitions of the three branches
to make checks and balances work." Instead, we have seen Congress's
powers regarding war "migrate ignominiously to the executive."...
Because contemporary conservatism was born partly in reaction to
two liberal presidents -- against FDR's New Deal and LBJ's Great
Society -- conservatives, who used to fear concentrations of unchecked
power, valued Congress as a bridle on strong chief executives. But,
disoriented by their reverence for Reagan and sedated by Republican
victories in seven of the past 10 presidential elections, many
conservatives have not just become comfortable with the idea of a
strong president, they have embraced the theory of the "unitary
executive."
The point applies to trade policy. Congress should free itself
from the Fast Track shackles, reject the Colombia FTA, and get on with
addressing the trade deficit, currency manipulation, outsourcing and
the un-reported phenomena of trading partners replacing tariff
reductions with import tax hikes (value added taxes).
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Written by Stumo
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Sunday, 04 May 2008 |
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I have criticized Thomas Friedman for supporting every trade
agreement he has ever seen, despite not reading one of them. His
past (and continued?) lemming-like support for trade agreements has pushed America into these troubles.
"We got this free market, and I admit, I was speaking out in
Minnesota--my hometown, in fact, and guy stood up in the audience,
said, `Mr. Friedman, is there any free trade agreement you'd oppose?' I
said, `No, absolutely not.' I said, `You know what, sir? I wrote a
column supporting the CAFTA, the Caribbean Free Trade initiative. I
didn't even know what was in it. I just knew two words: free trade."
But he makes some good points today, in an op-ed on whether America is still strong.
Traveling the country these past five months while writing a book,
Ive had my own opportunity to take the pulse, far from the campaign
crowds. My own totally unscientific polling has left me feeling that if
there is one overwhelming hunger in our country today its this: People
want to do nation-building. They really do. But they want to do
nation-building in America.
Nation building in the U.S. is a good idea. But we are
following the U.K. trajectory of decline. Giving away the riches
of the realm for foreign policy reasons on trade, pursuing expensive
military action in pipsqueak countries, allowing our production to be
shipped overseas, and financing it all on credit cards and subprime
mortgages.
We are not as powerful as we used to be because over the past
three decades, the Asian values of our parents generation work hard,
study, save, invest, live within your means have given way to
subprime values: You can have the American dream a house with no
money down and no payments for two years.
Here is a good visual metaphor - our infrastructure as a measure of our current prosperity position.
A few weeks ago, my wife and I flew from New Yorks Kennedy
Airport to Singapore. In J.F.K.s waiting lounge we could barely find a
place to sit. Eighteen hours later, we landed at Singapores
ultramodern airport, with free Internet portals and childrens play
zones throughout. We felt, as we have before, like we had just flown
from the Flintstones to the Jetsons. If all Americans could compare
Berlins luxurious central train station today with the grimy, decrepit
Penn Station in New York City, they would swear we were the ones who
lost World War II.
Singapore has a national strategy. We do not.
How could this be? We are a great power. How could we be borrowing
money from Singapore? Maybe its because Singapore is investing
billions of dollars, from its own savings, into infrastructure and
scientific research to attract the worlds best talent including
Americans.
If you don't have a strategy, you don't win. You shuffle and
sputter and decline. We still have the assets to deploy in a
focused strategy to reclaim prosperity for everyone. We just
don't have as much margin to survive distraction by the Colombia FTA or
tabloid issues in the presidential race.
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In the news
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The following article was written by Peter Morici on April 29, 2008:
Will the Fed Broaden Its Focus?
The Federal Reserve will almost certainly cut the target federal funds rate a quarter point to two percent on Wednesday. Fed watchers will be looking at the policy statement for clues as to whether the Fed will pause after cutting rates 3.25 percentage points since June.
The Fed may like to stop cutting rates. So far, rate cuts have aided homeowners with adjustable-rate mortgages and other borrowers with loans indexed to domestic interest rates; however, those cuts have not substantially increased bank lending.
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Read more...
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