Month: January 2017

Robert Lighthizer is expected to head USTR

From the WSJ:

Mr. Lighthizer has three decades of experience arguing for punitive tariffs on overseas companies. Given Mr. Trump’s deep skepticism of trade agreements such as the North American Free Trade Agreement, or Nafta, Mr. Lighthizer probably wouldn’t prioritize major new trade agreements, at least in the early days of the administration, according to people following Mr. Trump’s trade plans.

Still, Mr. Lighthizer has negotiating experience from his time in the Reagan administration, and if confirmed, he would take the lead in talks that could culminate in the bilateral deals that Mr. Trump’s team prefers—a departure, for instance, from President Barack Obama’s focus on a 12-nation Pacific deal.

Mr. Trump’s advisers have said his pick for Commerce secretary—billionaire investor Wilbur Ross—also could play a leading role on trade policy, as well as economist Peter Navarro, who will lead a new trade council at the Trump White House.

Here is Lighthizer’s 2008 NYT Op-Ed criticizing free trade.  None of this is good news.

What constitutes a violation of the Emoluments clause?

I’ve been wondering about this question, and the internet isn’t much help (here is background from Jonathan Adler if you are starting from scratch).  Say a foreign power pays money to my publisher, agent, or speaker’s bureau — does that count?  Intuitively, I would think so, even though the income is legally domestic.  But then it seems the clause is very difficult to define.  If I own an overseas business, or receive overseas royalties, or sell intellectual property overseas, must I trace the identity of every customer?  What if Angela Merkel bought a copy of one of my books translated into German?  Am I then, through the medium of royalties, taking money from a foreign power?  What if the Chinese government bought up a million copies of one of my books?  What if it is a Chinese shell company of unknown origins (they are common), which might be either state-owned or private, did so?  Or what the company is private, but itself owned by a state-owned company?  49 percent?  51 percent?  What if a state-owned Chinese company makes a large grant to a private individual, who then buys a million copies of a book?  Don’t library systems buy books, and aren’t most of them state-owned?

This line about China struck me:

Print sales, dominated by the country’s 580 state-owned publishing houses, are now worth 44 billion yuan ($7 billion).

Of course much of the income for the Obamas, during his time in office, came from royalties from book sales, including abroad and also in China.  For instance:

A large portion of the royalties came from sales overseas, an indication of the president’s popularity abroad. The tax return indicates that $1.6 million of the total book income was taxable in “various” foreign countries.

I cannot trace whether Obama’s Chinese publishers are state-owned companies, but most likely they are.  Some of the other Obama foreign publishers might be too.  Does that count as a violation of the clause?  Presumably there are foreign translations of some of Trump’s books too, or there will be.  JFK also had published books before he became president, and likely there were foreign rights sales of those too.

I get that this is a smaller issue, quantitatively speaking, than Trump’s foreign ventures, though foreign income was significant for President Obama in 2009 as a share of the total.  (Not to mention the difference in transparency or other possible differences in administration…I am not not not not not saying this is equivalence, so please don’t throw your weak-minded, question-begging, mood affiliated doctrine of “false equivalence” at me!)  And besides, the constitutional clause doesn’t say the payment has to be a large one.  At the time, I don’t recall anyone, myself included, thinking this was a violation of the emoluments clause, so again I am back to wondering what the clause exactly means.  In any case, you can imagine critics charging, rightly or wrongly, that a president might try too hard to be popular abroad.

Is selling intellectual property somehow different than selling hotel rooms?  Or is the unorthodox, Putin-oriented, “in your face” side of the Trump administration why we are framing the cases so differently?

“To whom” does a payment really go anyway?  And what is a “foreign power”?  What is a “state-owned company”?  The people at the WTO will tell you such questions can make your head spin.

china-books

Is the future equilibrium simply that future American presidents can be bribed through the sale of book and other IP rights, combined with aggressive “marketing” from foreign state-owned companies?  I would gladly learn more about this topic, and I am afraid that this year I am about to.

Derek Parfit has passed away

Here is the account from Daily Nous.  Here is Parfit on why there is a universe.  Here is the famed New Yorker profile of Parfit, amazing if you have not already read it.  Here is Parfit on death, a major preoccupation in his writings, even if it did not always come through.  And more on death here.  Of all the people I have met, no one comes closer to embodying the ideal of a questioning philosopher than did Derek Parfit.  He was relentless in the best sense of the word, and unforgettable.  And Reasons and Persons is one of the books that has influenced me most.

Do higher food prices help or hinder poverty reduction?

The answer may surprise you, here is part of an abstract from Derek D. Headey:

In this article World Bank poverty estimates are used to systematically test the relationship between changes in poverty and exogenous changes in real domestic food prices. We uncover indicative evidence that increases in food prices are associated with reductions in poverty, not increases. We empirically explain this result in terms of relatively strong agricultural supply and wage responses to food price increases, and the fact that the majority of the world’s poor still heavily rely on agriculture or agriculture-related activities to earn a living.

Here is the full (gated) article, via the excellent Kevin Lewis.

Monday assorted links

1. Anthony Atkinson has passed away.  And a nice tribute and overview.

2. The UK needs Parliament back.

3. Economics books for 2017.

4. “When I controlled for the age of the respondent and the urbanization of the zip code, it turned out that virtually all the effect on the bubble score is driven by the percentage of adults with a college degree in the zip code where the respondent lived. The zip code’s median family income had almost no independent effect. Another interesting finding: the zip code where people lived at age 10 had a modestly larger effect on their bubble scores than their current zip code.” Link here from Charles Murray.  He also lists the bubbliest parts of America, please note that Washington, D.C. does not do as badly as you might think, we are not yet so far gone.

5. One perspective on Russia’s strategy.

6. On the nostalgic WWII technologies of Rogue One.

7. The Andrew Reynolds claim that North Carolina is not a democracy any more is fake news and based on bogosity.  Note that North Carolina, in the rankings of that study, is far from the least democratic U.S. state, furthermore North Korea is rated as having “moderate” electoral integrity.

*European Art: A Neuroarthistory*, by John Onians

I wanted to like this book, as I am keen to discover new perspectives on the arts, even if I don’t agree with them.  “False” books on the arts often illuminate the artworks themselves, sometimes more than do the “true” treatments.  Yet this work I had a tough time making sense of.  I will confess to having read only about a third of it, and browsed some more.  As I understand the book’s thesis, the plasticity of the brain, as it changes across historical eras, helps explain changes in the content of the visual arts.  But I view brain plasticity as a generally overrated idea, evidence for such claims about the arts is hard to come by (how much do we know about differences in brains in ancient Athens for instance? And how good is our theory linking brain differences to artistic content?), and most of all neuroscience itself so often disappears during the book’s exposition.  Even the Amazon summary indicates the rather mysterious nature of the book’s main argument.  It is a beautifully produced volume, and it feels important, and maybe there is finally scope for a book of this kind, but…

Here is a (very) negative review by Matthew Rampley.  Some of you may nonetheless find this interesting.  It is a big ideas book, and perhaps it can prompt you to write a more clearly defined big ideas book in response.

Paul Krugman on tariffs and the trade balance

Here is a long post on those topics, worth a careful read and it contains many good points.  But, Nobel Prize in trade or not, I am not convinced by all of it.  On his first topic, I do not think a Trump administration will give us a pure VAT, rather I think the final outcome (if there is one), will indeed be more like a tax on (some) imports and various subsidies to exports; Jared Bernstein suggests the same.  On the second topic, given that the U.S. dollar is a global reserve currency, I don’t think it has to be the case for model-embedded reasons that “…reduced openness to trade should also inhibit capital flows”, though it is likely the case for broader political economy reasons (if they mess around with your trade, you are more afraid to invest your capital).  Krugman’s claim “…trade deficits are always a temporary phenomenon”, while technically correct, represents an odd, sudden conversion (reconversion?) to Don Boudreauxism, and a return to the kind of 2006 analysis/worries that predicted America would see a dollar crisis.  Yes, temporary along some time horizon.  But is the American trade deficit, which by now has persisted for decades, best and most usefully modeled as something due to flip because of an intertemporal budget constraint?  Maybe.  But maybe not, as that view has performed extremely poorly in predicting the value of the dollar.  (Most of all, it depends on the country, but it’s least likely to be true for America.  And what about “dark matter“?)  On most days, you’ll find more takers on the intertemporal budget constraint approach to macro over at Minnesota, and no I don’t think the “different models for different questions” trope gets one out of this box.  At the macro level, that constraint either kicks in or it doesn’t.  Finally, toward the end of the post there is an overestimate of how much an implied dollar depreciation is likely to persist in the forward rate in a manner that would limit investment from abroad.  For the USD, predicted movements as embedded in the futures or forward rate are generally quite small relative to movements due to “news”; of course the same isn’t always true for Argentina and other disaster-prone countries.

Here are comments from Brad DeLong.

Sunday assorted links

Where to eat in Lagos, Nigeria

Much of the food is good but not excellent.  For the very best, I recommend two places in particular:

The Yellow Chilli: All the dishes seem to be quite good, but arguably the jollof rice and the seafood okra are standouts.  Simply coming here for each meal probably beats doing a lot of search that will fail to find equal quality.

Sappor Cuisine: That’s if you are looking for street food and eating on the run.  It’s set in Freedom Park (worth visiting in any case), just get the weird Nigerian dishes you’ve never heard of before, plus some fish.  I’ve had four dishes there, and with not the slightest rumble in my stomach, in case you were wondering.  You might not think that steamed yam powder can be transcendently good, but it is.  At night there are worthwhile concerts in the park, so you can eat from here while you sit and listen.  The best suya I had was on the beach.

The test

I arrived at the Lagos airport and knew I needed to change some money.  And there is in fact a famed “airport market” for exchange.  At the baggage claim, an earnest young man came up to me and asked how much I wanted to change.  “$200,” I said.  He said “Give me the money, I will be back in five minutes with your Naira.”

I paused, and gave him the money.

He came back.

Happy New Year!

Addendum: Samir Varma sends along this interesting piece on global stereotypes.