Legalize it!

No, not that.

For the past couple of years I have relentlessly advocated the legalization of poppy growth in Afghanistan. And now an expert agrees!

Poppy grows really well in Afghanistan and is easily converted into very transportable tar, a primary ingredient for heroin. The Taliban had effectively outlawed poppy farming; but Anti-Government Forces (taliban with a "little t") have found it an incredibly effective means of filling their coffers (taking a page from the narco-terrorist FARC's playbook). Poppy growth rates exploded the past few years, especially in the more dangerous and uncontrollable southern and eastern provinces of Afghanistan - which now contain 82% of the global area under opium poppy cultivation.

Counterinsurgency 101 tells us to cut off financial support for insurgents, but with drugs this can be really tricky. You will isolate/anger a non-aligned farmer by destroying his crop, whatever it might be. After all, he's just trying to get by. It's hard enough to win hearts and minds in rural areas where the central government has little presence and it doesn't help when the first government official a farmer might ever meet comes to eradicate his income. So I advocate legalizing poppy growth with an important caveat: government monopsony.

Perhaps such an effort would need to be subsidized, but a legal market for poppy could feed legitimate morphine production by pharmaceutical companies. And in the spirit of Obama-mania, we could probably even engage with Iran in this effort; which is suffering high levels of opium use these days, especially in their youth population (and we know why dissatisfied youth are dangerous).

(Photo: LA Times) 

Obama's first move in the Arab world: LISTENING

In a timely interview with Al-Arabiya news, and signaling a strong break from the Bush administration, President Obama has made it clear that his administration will "start by listening".

According to a transcript of the interview posted on the Al-Arabiya English-language website, President Obama said that he had instructed Mr. George Mitchell (former Senate Majority Leader and current Special Envoy to the Middle East for the Obama Administration) to:

“...start by listening, because all too often the United States starts by dictating... we don't always know all the factors that are involved. So let's listen. ”

I would love to say "I called it!"... but I'm pretty sure my opinion is shared by many people (far smarter than myself) around Washington and, hopefully, throughout the State Department.

"What's smart power?  This is smart power." 

The new administration's approach to China

Most foreign governments have rallied behind the call brought forth by President Obama to restore the spirit and the strength of the United States - even the Chinese (though with a few concerns I will outline here). While most are looking forward to a "new chapter" and anxiously awaiting an opportunity to embrace the forthcoming change, there is cause for some nations to wonder what the rejuvenation of America will bring. After just a few days under the Obama administration, it is clear that China has become one of these, cautiously optimistic, nations. No one is overlooking the longstanding issues between China and the US: especially, China's human rights record, environmental standards, public censorship, fixed currency, and increased military spending. Not listed however, may be a bigger and more subtle challenge for the Chinese: both the United States and the Chinese have developed an insurmountable political ego. A renewed global, American presence means these two countries will inevitably step on each others toes.

Not suprisingly, this happened within minutes of President Obama's Inauguration. During the live broadcast of the Inaugural address, Chinese officials moved quickly to censor remarks on communism and fascism, in addition to a call for an end to the "silencing of dissent." For most of us watching in the United States these comments elicited historical nostalgia, but word of the Chinese censorship highlights how drastically the American worldview differs from the Chinese. In a country where a large portion of the population sees their brand of communism as a centerpiece of national pride and lives a separate struggle for prosperity, it is unlikely that such references would have been well received. More importantly, an educated audience would know that President Obama's words had less to do with the communism we see in China and more to do with American history and its historical rival. What is intriguing, is that the omission of these comments may have been a favor to the United States, in addition to a precaution meant to quell a growing sense of nationalism in China that could easily turn on either government. For the Chinese, it is possible that letting a stab at communism pass without notice would just be plain bad form. China would like to display President Obama as the charismatic leader that he has become and avoid the possibility that the public might falsely interpret his comments as opposition to the Chinese political system.

Post-inaugural remarks were decidely more focused, both in tone and detail. Timothy Geithner's statement to the Senate during his confirmation hearing directly accused China of manipulating its currency. Some sources are claiming the statement marks the beginning of a new era - one of hard line approaches to China's economic policy. China's adjustable currency rate has long been an issue among economists, but why did Geithner bother to bring it up now, except to please Senator Charles Schumer? Especially as the response was no small matter - when the Deputy Governor of the People's Bank of China politely reminds you that the widespread consequences of the current financial crisis and the trade imbalance in the United States will not be leveled by a mere currency revaluation, China means business. That friendly reminder definitely cost a few treasury bonds. Of course Tim Geithner wants our "major trading partners to operate with a flexible exchange rate system" and for "market forces [to] determine the value of the exchange rate." But I am certain that in the future, the Chinese will be quick to remind Mr.Geithner that he can't have everything he wants.

There are plenty of other issues for the United States and China to butt heads over, but I believe that the ball is in China's court. Tibet has been off the radar since negotions between the Dalai Lama and the Chinese came to a standstill and the world is already well aware of the floating smog cloud over the entire continent of Asia. (Also, our environmental woes are now officially mutual: note the literal "Collapse of the Clean Coal Myth" just days ago). However, there is one issue that China has made progress on faster than the Obama Administration likley expected. This is affordable health care. On Wednesday, China announced that it will bring Universal Health Care to 90% of the population by 2011 and spend as little as seventeen dollars per person. This is tough to believe, but if China can pull this one off, then touché. We have our work cut out for ourselves.

(Photo of Chinese currency from toesoxluver's photostream)

Public diplomacy in the new administration

Is it just me, or does the term “Public Diplomacy” seem to buzzing all over DC these days? Particularly since the election of President Barack Obama, there has been a renewed discussion of how the new administration could/would/should rebuild America’s image abroad. And for those who are only convinced by concrete rankings… the GAO recently listed “improving the United State’s image abroad” as No. 5 on its list of urgent issues for the new administration.

Traditionally, public diplomacy has been seen as “the transparent means by which a sovereign country communicates with publics in other countries aimed at informing and influencing audiences overseas for the purpose of promoting the national interest and advancing its foreign policy goals.” This typically includes activities such as exchange and visitor programs, language training, and cultural events- all activities that tend to be one-way communication. While it is undeniably important for the United States to educate other populations on American interests, culture and policy, I would argue that today public diplomacy serves an even greater purpose: creating a relationship between Americans and people of other nations.

Personally, I like the approach taken at the USC Center on Public Diplomacy. Professor Nicholas J. Cull describes public diplomacy as being made up of 5 main practices:

1. listening
2. advocacy
3. cultural diplomacy
4. exchanges
5. international broadcasting

Of these, I consider LISTENING to be the missing link in current US public diplomacy efforts. The development world seems to have a similar fault… too much talking and “teaching” and not enough listening and learning. Diplomacy should be, and can be, a two-way interaction. Mr. Michael Doran, Deputy Assistant Secretary of Defense for Support to Public Diplomacy, nails it:

It’s our view that excessive focus on us [the United States] is
counterproductive… In the current information environment a lot of strategic
communication is talking to foreign audiences about themselves – giving foreign
audiences information about themselves. That’s different than sending a U.S.
government message.

When interacting with foreign audiences we need to focus less on talking about ourselves, and more on what is most relevant to our audience: themselves. Of course, it is in our interest as a country to fund programs and campaigns around the world that will improve the image of the US- it would be disingenuous to claim otherwise. BUT, as Mr. Doran so astutely pointed out, making this the focus of public diplomacy programs is often counterproductive. Outside of the United States, we would be hard-pressed to find anyone who cares (or, frankly, believes) any message the US government would attempt to disseminate. The credibility of the US government abroad is, as we are all so often reminded, questionable at best, especially in the Middle East.

The best thing we can do for our image abroad at this point, is to stop focusing on articulating the message of the US and spreading specifically American values, and focus instead on giving people the knowledge and tools they need to improve their societies within their own cultural context. In her confirmation hearing Hillary Clinton stressed the importance of collaboration and cooperative engagement in today’s global environment, and highlighted the importance of bringing people together by investing in the bond of humanity (I know, cliché, but still…):

We must find common ground and common purpose with other peoples and nations so that together we can overcome hatred, violence, lawlessness, and despair… The
Obama administration recognizes that, even when we cannot fully agree with some
governments, we share a bond of humanity with their people. By investing in that
common humanity we advance our common security because we pave the way for a
more peaceful, prosperous world.

She went on to emphasize the “importance of a ‘bottom-up’ approach”. Public diplomacy efforts, particularly in the Middle East, have the potential to do a lot of good- but they can also do a lot of harm. While it is logical that the US government would focus on public diplomacy, I would argue that the best public diplomats are American citizens. Just as career diplomats play a critical role in government to government strategic communications, shouldn’t strategic communications with the general public be people to people?

While traditional approaches to public diplomacy are unlikely to change much, perhaps for its next public diplomacy strategy the US government should launch initiatives that encourage American citizens to engage directly with their peers in other countries. Microfinance, especially in the Islamic world (no-interest loans are highly palatable in the Muslim world), is a perfect way to encourage this type of interaction. And the reason I love this idea so much is that it essentially cuts out the government from the process, and allows individuals with resources to create a relationship with individuals with ideas (and no resources). What better way to encourage a “bottom-up” approach to diplomacy?

As Hilary Clinton noted during her hearing, President-elect Obama’s mother (Ann Dunham) was a pioneer in microfinance in Indonesia… just some food for thought.

Network Neutrality: a two part primer

As Obama takes office, network neutrality likely will take a back seat to more pressing issues, like a sinking economy and the upcoming (I hope) transition to digital television. But the appointment of a new Federal Communications Commission (FCC) chairman may elevate the issue once again. Rumor has it that Barack Obama will appoint Julius Genachowski to the role. Genachowski went to Harvard Law School and has worked for several Internet companies, including Expedia and Hotels.com . He's a strong choice: he'll bring both intellect and business experience to the administration. From reading Obama's Technology and Innovation Plan, to which Genachowski contributed, one gets the impression that the new FCC head comes out strongly in favor of network neutrality.

However, I hope Genachowski contemplates network neutrality carefully before pursuing any regulation, because it's a technically complex and poorly defined issue that leaves much room for legislative missteps. Network neutrality is essentially an umbrella phrase that takes on a different meaning depending on the context. The definition from Wikipedia is indicative of this vagueness: “network neutrality is one that is free of restrictions on content, sites, or platforms, on the kinds of equipment that may be attached, and on the modes of communication allowed, as well as one where communication is not unreasonably degraded by other communication streams .”

Through this post, I hope to clarify the network neutrality debate by decomposing the issue into four distinct components and analyzing each piece.

Free speech

Some argue that free speech necessitates network neutrality. Free speech advocates fear that broadband carriers or, more likely, the state will filter online content based on political or moral ideology. China does this now by blocking access to politically sensitive websites. While I agree that information should flow freely and unfettered from the internet (while taking reasonable precautions against material such as child pornography), I do not agree that free speech should drive the network neutrality debate. The suppression of free speech is an unrelated but legitimate cause for concern. But, in reality, no company or government entity could get away with this restrictive behavior within the US, as the public would react strongly and swiftly against such actions.

Open access data networks

Net neutrality also refers to open access data networks, though less frequently. For example, during the auction for the 700Mhz wireless spectrum (previously occupied by analog television signals), the FCC stipulated that whoever owns block C must allow any hardware device capable of supporting the appropriate protocols to connect to the wireless data network. Block C will support any compliant hardware, leaving consumers with more choice and freeing hardware makers from the restrictions of the carriers. I rather like this requirement because I hate how carriers (ahem, Verizon) restrict consumers to use certain cell phones on their cellular networks. Again, this aspect is important but unrelated to the core net neutrality debate and is more of a side discussion.

Restricting services or content from a competitor

Net neutrality proponents argue (and I agree) that the law should prevent broadband carriers from using their market position as Internet Service Providers to discriminate against competing applications or content. For example, Comcast would violate the spirit of net neutrality by developing a new weather service, and suddenly blocking access to weather.com. Again, in the presence of competition, a major carrier could not get away with this type of behavior. Customers would drop service quickly knowing that the ISP provided access to a walled garden instead of the Internet. But this is a straw man argument: few opponents of network neutrality would argue that carriers should exploit their position as providers to block a competitor’s service or product. More likely, a carrier would degrade a competitor’s service surreptitiously by slowing the data transmission. (more on this in the next post.)

In the next post, we’ll get to the true meat of the net neutrality debate: Tiered Service and Quality of Service. This is an important distinction with large repercussions in business and politics. I’ll explain these terms in more detail in the next post. Stay Tuned!

Why we need the WTO

The World Trade Organization is an odd institution. Its mandate is to govern and expand the global trading system, but it relies on an inherently mercantilist logic to do so. During negotiating rounds, countries essentially barter over ‘concessions’; that is, access to their domestic markets. By the same token, if the WTO rules that one country has neglected its trade obligations to another country, the WTO can grant the offended country scope to apply retaliatory sanctions, which essentially amount to the revocation of the concessions discussed above. If you think about it, negotiating over market concessions and threatening to revoke them to enforce compliance only make sense if you view exports as good and imports as bad.

In truth, unilateral liberalization is probably the best economic policy decision a government can make, in terms of aggregate gain. But it is also an unlikely policy outcome for many governments: the short-term dislocation is too severe, and the political pressure or even civil unrest risks from well-organized domestic interests are too large. While perhaps less economically palatable, multilateral liberalization is far more politically feasible, precisely because many people do view trade as competition. This is why the WTO must use mercantilist logic to advance free trade, and it is also why the world needs the WTO. By binding our trade liberalizing commitments in international treaties, they become much more difficult to backtrack on. This is especially critical in countries with weaker governance structures. I was reminded of this simple but powerful fact today when I read a new study on voxeu.org, which finds that rigorous accession commitments matter when determining a country’s benefits from joining the WTO.

This is an important way to understand the WTO, and it gets to the heart of arguments about why the WTO’s legitimacy is more important than ever. In a sense, the WTO is a painstakingly-constructed barrier against protectionism. But if it loses its legitimacy as the arbiter of international trade, this 60+ year old barrier would weaken significantly.

With that in mind, what happens to the WTO’s authority if the Doha Round ever completely collapses? It’s worth remembering that Doha has ceased to be only about the deal that’s on the table. In a broader sense, it’s now also about whether the WTO can “deliver” on trade. If it can’t, then it’s hard to imagine a scenario where the organization doesn’t lose a good deal of legitimacy.

The WTO saves governments from their worst and most short-sighted impulses. In these turbulent times, I would argue that we need it to be as strong and vigorous a force as possible.

UPDATE: see this post from last summer on why the Doha Round matters. What I wrote then has gained an even greater sense of urgency since.

Chiding the childish

I was somewhat anxious to be in DC the past few days. As watching more than two minutes of news coverage would have showed, the town was somewhat of a nightmare - especially when you've just come from San Diego. 

I watched the festivities from Ben's Chili Bowl, a historic restaurant in the U St. Corridor, where President Obama first ate when he arrived in town. The Bowl is a legacy of the civil rights movement and the mood was appropriately joyous. Joy is one thing and, given the historic nature of the moment, warranted. But the classless booing of President Bush is not. I don't care for ideologues of either side. Results deserve congratulations more than a win and competence is to be praised above party. This is not to say that Bush delivered good results or was competent but to treat a man who has given 8 years of his life to this country in such a way is childish. In this vein, please indulge me posting pieces of Andrew Levy's most recent "To Don't" list for conservatives. I may not agree with everything he writes or believes, but the core message, that we should act as practical adults, is more welcome than any gloating. 

DON'T question the motives - question the policy...remember that President Obama is doing what he think is best for the country, as President Bush did. Both men love America and want what's best for her. End of story.

DON'T make it personal.

DON'T cozy up to and champion foreign dictators and despots.

DON'T pretend you're being brave when you criticize your government. Not while people in other countries actually, y'know, DIE, when they do that. 

DON'T say you're going to move to Canada and then stay here.

DON'T call people un-American one week, and then talk about how 'We are not blue states or red states, we are the United States' next week.

DON'T automatically think people who disagree with you are stupid or evil. Some of them are, of course. But most of them aren't, and you might actually learn something if you listen to them.

We're facing one of the most difficult periods in our countries history. Squabbling and lingering on past wrongs won't get us anywhere. Both sides need to remember that. 

Social responsibility is the new black

... or in this case, the new venti caramel skim milk, no whip latte:



Ok, so the music is super-cheesy, but the concept is indicative of a new trend: social responsibility. Companies world-wide are making CSR an integral part of their business plans while social entrepreneurship and micro-finance have become new buzz-words in the development arena. As new leadership has come to America, we heard from the steps of the Capitol the new President tell us all that:

Starting today, we must pick ourselves up, dust ourselves off, and begin again the work of remaking America. For everywhere we look, there is work to be done. The state of the economy calls for action, bold and swift, and we will act - not only to create new jobs, but to lay a new foundation for growth...We honor [our fallen heroes] not only because they are guardians of our liberty, but because they embody the spirit of service; a willingness to find meaning in something greater than themselves. And yet, at this moment – a moment that will define a generation – it is precisely this spirit that must inhabit us all.

This "spirit of service" was harnessed by the Obama campaign in an unparalleled way which energized a population practically into a grassroots movement... and, arguably, led to the election of President Barack Obama.

With the new administration in Washington encouraging individual responsibility and social consciousness as a necessary part of working towards sustainable change, it seems like service and social responsibility will be seeping deeper into America (and hopefully the world) over the next 4 (maybe 8) years. For, as our new President reminded us yesterday:

...as much as government can do and must do, it is ultimately the faith and determination of the American people upon which this nation relies...Our challenges may be new. The instruments with which we meet them may be new... What is required of us now is a new era of responsibility – a recognition, on the part of every American, that we have duties to ourselves, our nation, and the world, duties that we do not grudgingly accept but rather seize gladly, firm in the knowledge that there is nothing so satisfying to the spirit, so defining of our character, than giving our all to a difficult task.

This is the price and the promise of citizenship.

President Obama... thank you, and good luck.

44

Congratulations to the newly-inaugurated President Barack H. Obama. It really has a nice ring to it.

We're constantly reminded of the turbulent times that we live in: a deep recession, a severe financial crisis, multiple wars, and dire foreign policy challenges. President Obama will face a number of tests almost immediately. We wish him the very best, because a bright future for the country depends in no small part on the success of his presidency.

But all that can wait for at least a few hours. For now, let's savor this remarkable, historical, cathartic, and completely uplifting moment in the American story.

Time to read up

Both Nick and I will be in San Diego for our friend's wedding this weekend, so nothing new until Monday. Now's a good time to catch up on the rest of the internets (and the zzzeitgeist archives), and please check back in on MLK day.

Baby, it's cold outside...

Let's hope Mr. Barroso's "warning" to Russia is more convincing than Mr. Blix... 

Come on Russia, play nice... the rest of the world doesn't have your vodka supply to get through the winter.

Recession fun: spot the inferior good!

In economics, an inferior good is a one which is consumed less as income rises. This is an easy concept to understand: as you get older and make more money, you’re probably going to eat less Ramen Noodles. However, consumption of inferior goods is also broadly counter-cyclical, meaning that as the economy slows, consumption is likely to rise.

We're in the midst of a bad recession, which means that many people have less money to spend on leisure. Instead, here’s a game you can play for free. I call it: SPOT THE INFERIOR GOOD! The rules are simple: whoever identifies the most goods for which consumption has increased during the last year, wins. Post lists and debate whether goods are actually inferior in the comments; winner gets a free cup of Ramen Noodles!

Here’s my list:

1. Natural Light Beer
2. Subway Veggie Delite Subs
3. Pornography
4. Spam
5. Boxed wine
6. Tuxedo t-shirts
7. Rob Schneider movies

Hey, I said it was a bad recession...

Comics in crisis

I always knew Bill Watterson was prescient, but this is just scary.

(Nice job World Bank; really, I didn't think you had it in you) 

Stimulus as multiple equilibria?

Mark Thoma, via Paul Krugman.

I think the stimulus package is like driving up an icy hill. If you don't have enough momentum from the start and fail to provide enough "stimulus" to get the car over the crest of the hill, you can slide all the way back to the bottom...perhaps you can hold your position if you don't make it to the top, and then start again from the higher level...Essentially I am arguing that there are crucial economic and psychological "tipping points" that must be reached in order for the economic recovery package to be effective.

Yes, but how do you know how much gas to put in if you can't see the top of the hill?

Slumdogs and status quos

As awards seasons creeps up on us it's nice to enjoy a little mindless movie gossip amongst the never ending financial commentary. But of course those of us in Washington, which is apparently Hollywood for ugly people, can't just let movies be movies. A little healthy dose of IR theory in our cinema won't kill us, right? Right?! David Rothkopf on Slumdog Millionaire (at his new blog):

When I saw the film...I left the theater wondering to myself about the way that international affairs are covered in the media or discussed in Washington. Most of the stories we write are about leaders, presidents and congresses, about policies and summits, about strategies and budgets. Every so often, in a war, we capture the shot of an injured child or weeping mother, but we miss the essence of it all, the stories of individual people.

Rothkopf is right that we should focus a little more on the people who need development assistance, not the elites tasked with its implementation. This isn't exactly new thinking, though. My favorite economist has been saying this for years; the "capabilities" of people are what matter in helping a country grow. But in trying to steer a policy community as disparate as development, we should be careful to avoid cliches and one-size-fits all prescriptions - the very aspect of established policy circles that got us to this tired method of international study in the first place. 

The movie was fantastic; but take it for what it is - a great story. When pundits and critics start to heap praise like this on it (which everyone seems to be doing) we should be very wary. After all this is the most cliched understanding of modern India that there is:

Juxtaposing the brutal poverty of Mumbai's slums with the glitter and promise of a global television phenomenon like "Who Wants to be a Millionaire?"...[the spirit to overcome this gap] in particular animates all of India.

C'mon! This is straight out of a bad, cheesy travelogue that 20 pages later will tell you which ashram offers the best enlightenment. If you want to reform how people cover and think about policy, don't fall victim to the same generalizing (and frankly lazy) thought patterns. Still, you should go see the movie. 

(Photo by Cine Fanatico)

Pentagon, purple hearts, and PTSD

Mental health is not something that seems to crop up on the political radar too often. Health care reform gets a lot of attention (and rightfully so) but mental wellness seems to be the neglected black sheep of the policy family. People either don't understand it, are uncomfortable with it in public, or, most amazingly, simply still cease to believe it is a matter of serious concern.

Apparently, the defense community falls into the latter. The Pentagon announced last week that they will not bestow the Purple Heart to any soldier on the basis of mental health disorders caused by events during service. The rationale? Mental disorders are notoriously hard to quantify and diagnose, and with 1 in 4 Americans annually suffering from some type of affliction, it may seem too ubiquitous too deserve such a high honor. Additionally, the opportunity exists for misuse by those seeking greater benefits. 

But with the prevalence of Post-Traumatic Stress Disorder (PTSD) and the skyrocketing suicide rate among returning soldiers, it should be obvious that these are very real problems affecting our country's soldiers that deserve some type of recognition. This decision seems to mark a step backwards in the quest to establish PTSD and other mental problems as serious conditions and more importantly improve the availability and efficacy of treatment.

Outreach and rehabilitation services to veterans are notoriously poor and marginalizing those with serious mental disorders will only exacerbate any problems veterans have in re-adjusting to life at home. The Pentagon doesn't have to give them a medal, but the least they deserve is a chance at a normal life. 

Bhagwati on Obama on trade

*This post on trade represents my personal opinions.

Sometimes, it feels like Mr. Obama’s honeymoon period is ending before he even takes office. In an op-ed published earlier this week, Jagdish Bhagwati absolutely savages Barack Obama on trade issues. I am a huge fan of Dr. Bhagwati. He is one of the greatest trade economists and one of the most unrepentant defenders of free, multilateral trade. His work has shaped my own views on trade more than any other single thinker.

Dr. Bhagwati chides Mr. Obama for his “eloquent silence on trade issues” and his tepid support of the Doha Round. He also criticizes the auto industry bailout (no disagreement here), which he believes will be WTO-incompatible, and dismisses Obama’s trade team as a pack of under-qualified, semi-protectionists.

His most interesting argument is against America’s bilateral/regional trade strategy. In Dr. Bhagwati’s eyes, powerful union lobbies and other political forces have produced a trade agenda in which the US negotiates standard-laden agreements with small, poor and comparatively weak countries. The standards, in areas such as environment and labor issues, effectively undermine the smaller partner’s areas of comparative advantage. He characterizes this “free but fair trade” and “an exercise in insidious protectionism that few recognise as such.” Ouch.

As an aside, I wonder how Dr. Bhagwati reconciles this novel argument with the fact that every single one of these bilateral agreements was negotiated by a Republican administration and narrowly passed in Congress by Republican legislators, over the vigorous opposition of Democrats and organized labor?

In any case, the economic logic of Dr. Bhagwati’s arguments cannot be ignored. The US, and the world, would best be served by the successful conclusion of the Doha Round. In terms of regional agreements, negotiating bilateral deals with small trade partners is an exercise in economic futility: any positive gain is a drop in the vast ocean that is the US GDP.

Trade, however, is as much a political issue as it is an economic one. This is unfortunate, but it isn’t very useful to assess trade issues without considering the political ramifications. Dr. Bhagwati acknowledges this: “history shows that the freeing of trade is nearly impossible to achieve in times of macroeconomic crisis.” In assessing where Mr. Obama will fall on trade, we need to examine the political/economic climate he inherits: an American public that is increasingly sceptical of the benefits of trade, an outdated suite of government programs to assist displaced workers, and one of the most vicious recessions in the postwar era. Paradoxically, if Mr. Obama pushes too hard on trade without recognizing these other challenges, he may risk further damaging the 70-year political consensus in the US that freer trade is a good thing. I was thinking out loud about this very issue earlier this week.

As is such, Dr. Bhagwati’s argument is strongest when he calls for more vocal leadership on the issue of trade. I do think that President Obama will need to work hard to resell trade to the American people, so I am bothered by his “eloquent silence.” I wish we had seen a stronger push for Doha last month from the Obama camp. Still, given the current political realities that affect trade, we need to give Mr. Obama more time before sounding the warning on his trade agenda.

South Korean trade politics: NOT for the faint of heart

Thought the West had a monopoly on contentious trade politics? Think again:

Opposition lawmakers ended their violent, 12-day siege of South Korea’s parliament Tuesday after successfully delaying a vote on a major U.S. free-trade deal. Democratic Party legislators had occupied the National Assembly since Dec. 26, fending off security guards who tried to drag them out by force last week. The sit-in ended after the ruling Grand National Party abandoned its bid to ram through the legislation before President-elect Barack Obama takes office Jan. 20. South Korea and the U.S. agreed to the landmark accord in 2007 to slash tariffs and other barriers to trade, but the deal sparked an outcry from farmers and labor, and Obama has hinted he will seek to renegotiate it. The deal would be the largest for the U.S. since the North American Free Trade Agreement more than a decade ago.

Of course, all this comes after the opposition tried to force their way into a barricaded room where the free trade agreement was being discussed using sledgehammers back in December. Yes, sledgehammers. Grand National Party members responded in kind, spraying fire extinguishers at the opposition party members. Yes, (sigh)... fire extinguishers. At least one person left the scene with blood streaming down their face.

Ridiculous as this all sounds, politics devolving into fisticuffs is not so unusual in South Korea. Still, it shows how contentious the domestic politics of trade can be on both sides of a proposed agreement. South Koreans are uncomfortable importing American beef, among other things. Americans are frustrated at South Korean quotas on imported autos, among other things.

It's all very unfortunate, because the KORUS FTA is the most economically-meaningful trade deal that the Bush administration managed to negotiate during its tenure. As it stands, you’re more likely to see another bench-clearing brawl in the South Korean National Assembly than this agreement get ratified in either country...

If you haven't seen Emily's excellent post yesterday about the riots in Greece, have a look for another dose of political violence.

(The picture above is from a 2004 brawl in the South Korea National Assembly, via Delaware Online. For the truly unbelievable pictures from the December battle, check out this New York Times article.)

Gaza Strip Maul

The Israeli Army's recent attacks in Gaza are a fresh reminder that, um, conflict in the Middle East is not new, and is still going on. Many International Relations theorists tell us that when danger is recognized the stronger party will probably act to defend itself.

Here it is in practice:

The Daily Show With Jon StewartM - Th 11p / 10c

Strip Maul

Barack Obama Interview
John McCain Interview

Sarah Palin Video
Funny Election Video

Other than Jon Stewart, who can we turn to these days? I don't always find myself agreeing with Jimmy Carter, but he might be on to something; indeed, these recent hostilities don't seem very productive. (Side Note: Carter can be really wrong sometimes: check out the last paragraph of an op-ed on cotton.) The BBC gives a pretty good breakdown of the situation here and sums up with:

Diplomats hope there can be a new ceasefire agreement. This would have to be based on three principles. Two of these are demanded by Israel - a commitment by Hamas not to fire
rockets into Israel, and a method (perhaps some kind of physical barrier) to stop the smuggling of arms. One is demanded by Hamas - the relaxation of the blockade on Gaza.

If there is no agreement, Israel will try to impose its conditions by force. Hamas will contest it.

What I find interesting is that some commentators believe that Israel's actions in the Gaza strip are a function of their concern about U.S. reactions, which may or may not change following the Obama inauguration on January 20th. But most commentators also issue their thoughts on Israel, Palestine, Syria and Iran in quite simplistic terminology, speaking as if these countries, filled with millions of individuals, are unitary actors. Sure, it might be easier to talk about the dynamics of international relations as if each country is a temperamental child on a playground with a propensity to get fussy- but I for one tire of this unimaginative vocabulary. Complex situations demand more than silly analogies. Basic audiences may need their CNN or FOX News commentators to frame the situation in historical terms easier to understand, but we should demand better of our policy makers. I personally favor Organizational Process Model or Bureaucratic Politics Model when analyzing how states behave during a crisis. Treating states like black boxes can be dangerous; looking at their internal situations can prove more revealing, although it's certainly more difficult.

THIS. IS. SPARTA! ... no wait, it's Athens.

As Athens, the “birthplace of democracy”, has been reduced to ash, broken glass and plenty of confusion, many people have been wondering what the hell is going on. Now that the dust is starting to settle...pun intended...it's worth examining what sparked the chaos in Athens. Was it:

a) the death of a 15 year old boy
b) the deteriorating economic situation
c) the lack of sustainable employment for the “700€ generation”
d) an attempt by an organized group to destabilize the government
e) all of the above

As any self-respecting test-taker knows, e) all of the above, is pretty much always the correct answer. The situation in Greece is incredibly complex, and cannot be explained away, much to the media’s dismay, by A, B, C, or D. The bottom line is that the shooting of 15-year old Alexis Grigoropoulos was the spark that lit the flame. The shooting united various groups of people, and became a launching point for protesting every ill of Greek society.

First and foremost, an important distinction needs to be made between the protesting groups of the past month. Peaceful demonstrators, made up of mostly students and young professionals known as the “700€ generation” marched in the streets demanding everything from justice for the death of young Alexis, to an increase in jobs in the public sector. This group has a whole host of wide-ranging complaints and demands, which are far too complex to address in anything short of a lengthy essay, so I’ll spare you. It is the second group, mainly made up of anarchists, who are responsible for the destruction and chaos in Athens. Quite frankly, I don’t even think they really know what they want… other than excuses to destroy property, wear Che Guevara t-shirts, and spout outdated cliché one-liners from left-wing literature that they probably haven’t even read.

With an impotent police force, universities that breed rage and frustration instead of knowledge, and a decrepit healthcare system, Greece is flirting with institutional failure. Anger about poverty and a stagnant political system are intersecting with a long tradition of extreme-left political activism and disdain for authority - in a very dangerous way.

The resurgence of “Epanastatikos Agonas” (or “Revolutionary Struggle”) in recent years has not occurred in a vacuum. Two violent attacks on police units in the past few weeks have been traced back to Revolutionary Struggle - the group responsible for the 2007 U.S. Embassy attack. Revolutionary Struggle surfaced in 2003 after the dissolution of the group “November 17th” but, unlike “November 17th”, Revolutionary Struggle is thought to be more diverse, both ideologically and ethnically, and better armed. What is needed now, more than ever, is a show of force from the Greek authorities. Although, if history is any indicator, any hint of law and order is probably a long-shot. Nikos Konstandaras, the managing editor of Kathimerini (one of Greece’s most respected newspapers) summed up the madness and impending danger quite succinctly:

[Alexis’ death] will be used to bind together every disparate protest and
complaint into a platform of righteous rage against all the ills of our society.
It will quickly become a flag of convenience for anyone who has a grudge against
the state, the government, the economic system, foreign powers, capitalism, and
so on. If Greece has already appeared difficult to govern, it will now be
out of control.

(Photo by Nikolas Giakoumidis)

Ya I know, poor taste

Hey Angola, 1995 called. They want their virus back.

Wishful thinking

Nancy Birdsall at the Center for Global Development, one of the few decent think tanks in DC, has produced her "policy wish list" for 2009. It's pretty predictable stuff and some of her wishes are stuff we here at zzzeitgeist have been advocating for some time, though her methods are not prescriptions we see too often. 

Everyone seems to support freer trade and increased development, but is it a good idea to avoid protectionism by offering "permanent duty-free, quota-free market access for the poorest countries" and embrace innovations such as cash on delivery aid? Foreign aid certainly needs to be modernized but Blattman does a better job of explaining why. It's hard to only give aid based on quotas when a country lacks the infrastructure necessary to reach said quotas. 

Too bad in this economic climate these wishes will remain just that.

BTW what's up with number 5?

Strange bedfellows?

I've been somewhat confused by the skepticism regarding the news that Obama's stimulus plan is largely composed of tax cuts - about 40%. Krugman Lefties think he's succumbing to Republican pressure, others fret that the tax cuts will essentially amount to welfare payments because only people making less than $200,000 a year will qualify.

I've noted before my shock that prominent academics are divided over this issue. But to be frank, I'm following this with cautious optimism (let's keep in mind that the bill has to pass!). Here is a politician actually fulfilling a campaign promise and proposing an idea that both sides of the aisle can get behind.

Until the bill passes speculation remains just that, but what really counts is how the cut is implemented. I agree with Cowen that the tax cuts probably won't drive recovery:

but less money will be wasted and...it shows that the Obama team is willing to flinch and be realistic.

When we're used to hearing figures in the hundreds of billions, saving a little money probably isn't the worst thing in the world. People may not spend the money, but if it helps people avoid defaulting on personal loans or expands credit to enterprise where it wasn't before then that's one less loan the government has to guarantee under TARP.

There's also a bit of pscyhology wrapped into this proposal. Unlike the Bush tax cuts where citizens received one large check in the mail, Obama's plan has a smaller portion taken out of each paycheck. Does this signal a move away from encouraging consumer spending and instead focusing on personal fiscal responsibility? Probably not, but it's an interesting tactic.

Martin Sheen is an economics badass... with a heart of gold

Via Trade Diversion, we have this unintentionally hilarious snippet of dialogue from the West Wing. In my head, I read it in the Dirty Harry voice:

When I was 26, I wrote a paper supporting the deregulation of Far East trade
barriers. Nearly got thrown out of the London School of Economics. I was young
and stupid, and trying to make some noise.

This is one of President Jed Bartlet's line. On the show, the character, played by Martin Sheen, earned his Master's and PhD at the London School of Economics. As a brand-new alum of the LSE, I can confidently second Jonathan Dingel in saying that A.) this sentence makes no sense and B.) who would ever get thrown out of any academic department, let alone one at the London School of Economics, for arguing (I think) in favor of trade liberalization?

I never really got into the West Wing, although I've heard it's pretty good. Still, I can't help but feel like this is one of those instances where a TV character is only as smart as the people who write for him...

Trade counterfactuals

*This post on trade represents only my own opinions.

For the sake of argument, I want to present an alternate viewpoint about President-elect Obama and trade. I’ve been thinking about it a lot about, and specifically whether or not he’s ‘bad’ for trade. He distances himself from protectionist rhetoric all the time, and he likes to reiterate that he both understands the fundamentals of trade and considers himself a free trader. And yet, the conventional wisdom among many trade watchers seems to be that he won’t pursue new agreements and that he won’t try to bring a successful conclusion to the DDA. How do you reconcile these two points of view? Is one of them wrong?

For what it’s worth, I don’t think the two positions are incompatible. I agree that is unlikely that Mr. Obama will do much on trade for the first year or two of his presidency. But this only in part because of the financial/economic crisis over which he will preside – part of it is purposeful as well. Free traders tend to look at the big picture: the aggregate benefits of freer trade outweigh the concentrated losses, and society as a whole gains. Mr. Obama recognizes this, but he is also much more in tune with the distribution of these gains. In other words, his departure point is different.

I think that in Mr. Obama’s mind, the postwar consensus on trade has unraveled. And the public has grown much more skeptical about the benefits of globalization and much more wary of the downsides. In this climate, it is possible that simply continuing the current trade policy is no longer sustainable. To make people more accepting of future trade deals, it might mean that you need better unemployment assistance, better infrastructure investment, better retraining schemes and better health care that is less tied to employment. And Mr. Obama is very eager to do all of these things.

So while trade watchers may be wary of Mr. Obama’s short term stance toward trade, his intended investments in an enhanced social safety net may actually make it more feasible to conduct ambitious trade deals in the future. The remaining question (aside from whether or not this is accurate!) is whether or not the US can afford to take a trade pause while other nations are racing forward.

Any thoughts? This is just a hypothetical counterfactual. Feel free to tear it apart in the comments section.

Can I even re-post this?

Best comment I've read on the fighting in Gaza. Megan McArdle:

I don't see any untainted victims. I see a bunch of people who have been stomped on by history beating up each other in revenge for past wrongs that can't be righted, lashing out whenever they think they can get away with it without losing the foreign funding that allows them to continue the fun. And I don't ever blog about it because one is not allowed to have an opinion on the matter - no matter what I say, I'll be excusing terrorism or, irrelevantly, the holocaust, or shilling for western imperialism.

On this delightful note, Happy New Year. Best wishes for peace, health, and prosperity.